The US Federal Reserve has taken a significant step to improve access to banking services for the cryptocurrency sector after a long period.
In an official statement, the FED announced that it has taken steps to formally remove reputational risk from bank supervisory standards.
Accordingly, the Fed has initiated a 60-day public consultation period for a new proposal that would prevent banks from using “reputational risk” as a reason to refuse banking services to the cryptocurrency sector.
With this move, the Fed is trying to legalize a rule that removes “reputational risk,” which is thought to have caused cryptocurrencies to move away from banking services in recent years, from banking supervision.
The Fed first began making changes last June, instructing its regulators to stop forcing banks to close customer accounts due to reputational risk.
Michelle Bowman, the Fed’s vice chair for supervision, stated, “We have heard of concerning cases where regulators have pressured financial institutions to deny banking services to customers based on reputational risk concerns, citing their political views, religious beliefs, or involvement in undesirable but legitimate business dealings. Discrimination by financial institutions/banks on these grounds is illegal and has no place within the Fed’s supervisory framework.”
Senator Cynthia Lummis praised the move in a social media post, stating, “I am pleased to see this significant step taken to permanently remove ‘reputational risk’ from Fed policy and end ‘Operation Chokepoint 2.0,’ so that America can become the digital asset capital of the world.”
*This is not investment advice.