The US Federal Reserve has initiated the process of permanently removing the concept of reputational risk from its supervisory guidelines for banks. This decision may finally end informal pressure on financial institutions that have so far refused to provide services to companies from the cryptocurrency sector. For investors and entrepreneurs from the Web3 industry, this means a chance for more stable development and easier access to the traditional financial system.
Subjective assessments give way to hard data
In recent years, many companies operating in the crypto sector have encountered enormous difficulties in opening and maintaining basic bank accounts. Financial institutions often cited the so-called reputational risk, which allowed them to arbitrarily close accounts without giving specific financial reasons. Currently, the US Federal Reserve has announced a sixty-day public consultation period, after which this controversial term is to permanently disappear from official regulatory documents.
The Fed’s vice chair for supervision, Michelle Bowman, noted in a statement that the standard so far was extremely vague. In her opinion, it introduced unnecessary variability in the approach to control and distracted attention from real, measurable threats. The new regulations are to focus solely on fundamental issues such as credit risk, liquidity and market risk. Bowman emphasized unequivocally that discrimination by financial institutions based on subjective assessments is completely illegal.
The final end of Operation Choke Point 2.0
The cryptocurrency community has long raised alarm about a deliberate government campaign, unofficially called Operation Choke Point 2.0. This initiative was aimed at cutting off legally operating businesses from the banking system through informal pressure from regulators. Senator Cynthia Lummis, known for her support of the digital asset industry, publicly praised the Fed’s move. She stressed that the central bank should not act as judge and executioner for technology companies, and that a new approach is crucial for the United States to become a global center for financial innovation.
However, experts and market analysts point out that the changes in the guidelines are only the beginning. Market volatility and strict money laundering regulations still force banks to be very cautious. Moreover, the development of blockchain-based payment systems is in direct competition with traditional deposits and transfers. Therefore, industry representatives suggest that clear statutory regulations are necessary to fully normalize relations. Congress is expected to pass comprehensive laws that will replace discretionary actions by officials with predictable law.
The broader political context and legal battles
The problem of cutting off banking services goes beyond the crypto sector itself and is gaining an increasingly political dimension. Just a few days ago, information came to light that JP Morgan Chase had closed accounts belonging to Donald Trump after the events of early 2021. In response, the former president filed a lawsuit seeking damages in the amount of $5,000,000,000 for allegedly politically motivated decisions. It is worth recalling that last August, Trump signed an executive order banning politicized account closures, which the White House called the final end of Operation Choke Point 2.0.
At the same time, further evidence is being revealed about the pressures exerted on banks in previous years. The Federal Deposit Insurance Corporation recently paid more than $188,440 in legal costs after losing a public records battle. A case initiated by one of the largest cryptocurrency exchanges revealed dozens of letters in which officials directly discouraged banks from serving entities from the industry. The Fed’s current actions are therefore a clear signal that the era of informal blockades is coming to an end, which in the long run may significantly stabilize the market and increase confidence in digital finance.
