Recently, the US Federal Reserve made changes to banking oversight by eliminating the concept of 'reputational risk,' which has sparked wide interest within the crypto industry.
Changes in Banking Oversight
The US Federal Reserve has announced that it is reviewing and removing references to reputational risk from its supervisory materials. This decision comes after the crypto industry argued that this risk was used to unjustly limit access to banking services for crypto firms. Furthermore, the Fed plans to train examiners and ensure consistent application of these changes among the banks it oversees.
Reactions to the Changes
US Senator Cynthia Lummis commented on the decision, stating that aggressive reputational risk policies 'assassinated' American Bitcoin and digital asset businesses, emphasizing that it is a win, but further work is needed. Rob Nichols, president of the American Bankers Association, welcomed the changes, noting that they will make the supervisory process more transparent and consistent.
Future of Crypto Regulation
Other regulators in the US have also begun to ease restrictions on crypto-related activities. For example, the Office of the Comptroller of the Currency confirmed that banks could trade cryptocurrency on behalf of customers. Similarly, the Federal Deposit Insurance Corporation stated that institutions under its oversight could now engage in crypto-related activities without prior approval.
The changes introduced by the Federal Reserve may have a significant impact on banking relationships with crypto firms; however, concerns remain about the potential consequences of the lack of reputational control.
