Blockchain Association Urges Federal Reserve to Codify Removal of 'Reputation Risk' in Bank Oversight

The Blockchain Association has formally requested that the U.S. Federal Reserve codify the removal of "reputation risk" from its bank examination programs. In a letter sent Monday, the industry group argued that such a rule is necessary to ensure objective and consistent standards for all regulated financial entities, asserting that regulation should not be used to pick winners and losers based on political trends. The term "reputation risk" has historically been utilized by regulators to justify the closure of bank accounts for cryptocurrency companies, a practice often associated with "Operation Chokepoint 2.0." While the current administration has rolled back several of these policies, the association emphasizes that formal codification is required to protect the industry from potential shifts in future political leadership. This request follows a trend of regulatory alignment. On April 7, both the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) finalized rules to remove reputation risk from their respective supervisory programs. The Blockchain Association is now pushing for the Federal Reserve to harmonize its standards with these agencies to provide clarity and predictability. Industry advocates, including the Cato Institute, have noted that most debanking cases in the U.S. resulted from government pressure rather than individual bank policies. By removing this subjective metric, the industry hopes to secure stable access to banking rails, reducing the operational risk for crypto-native businesses and their financial partners.