The US Federal Reserve has decided to eliminate reputational risk from the tools used in bank supervision, which could significantly affect collaboration between financial institutions and crypto companies.
Changes in Bank Oversight
The Fed stated that it has begun the process of reviewing and removing references to reputation and reputational risk from its supervisory materials, including examination manuals. This decision aligns with other American bank regulators such as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation.
New Opportunities for the Crypto Industry
Banks can now work with crypto companies without fear of being flagged for doing so. This was confirmed by a Bitcoin representative who stated that this 'clears the path for banks to work with crypto.' This move is a response to the restrictive measures that were enacted during the Biden administration.
Debanking Issues on a Global Scale
Debanking is when banks close or restrict access to accounts for individuals or organizations they consider risky. This issue has become particularly acute in developing countries, where citizens face stringent identification requirements.
The removal of reputational risk from bank supervision is a significant step that could alter the crypto services market, fostering greater collaboration between the banking sector and the crypto industry.
