<\/p>\n
The US Federal Reserve is seeking to codify a rule removing \u201creputation risk\u201d from banking supervision, which some have blamed for a wave of crypto debanking in recent years. <\/p>\n
The Fed initially began making<\/a> changes in June last year, announcing that it had directed its supervisors to stop pressuring banks to shut down client accounts over reputation risk, meaning banks can only make decisions on clients based on financial risk management.\u00a0<\/p>\n In a press release<\/a> on Monday, the Fed said that it is requesting feedback on a proposal to turn this into law. The Fed has set a 60-day deadline for submitting comments.\u00a0<\/p>\n \u201cWe have heard troubling cases of debanking \u2014 where supervisors use concerns about reputation risk to pressure financial institutions to debank customers because of their political views, religious beliefs, or involvement in disfavored but lawful businesses,\u201d said vice chair for supervision Michelle Bowman.\u00a0\u00a0<\/p>\n \u201cDiscrimination by financial institutions on these bases is unlawful and does not have a role in the Federal Reserve\u2019s supervisory framework,\u201d she added.<\/p>\n In an X post on Monday, Lummis praised<\/a> the move, adding that it is \u201cnot the Fed\u2019s role to play both judge and jury for banking digital asset companies.\u201d<\/p>\n \u201cGlad to see this important step to permanently remove \u2018reputation risk\u2019 from Fed policy and put Operation Chokepoint 2.0 to rest so America can become the digital asset capital of the world.\u201d<\/p>\n Galaxy Digital\u2019s head of firmwide research, Alex Thorn, also praised<\/a> the move, noting via X on Monday that \u201cchokepoint 2.0 rollback continues.\u201d<\/p>\n Operation Chokepoint 2.0 is a term used by many in the crypto industry to describe what they felt was a coordinated effort by the Joe Biden-led US government<\/a> and banking sector to cut crypto firms off from using traditional banking services<\/a>.\u00a0<\/p>\n The current US administration has made a concerted push to end debanking in the US, with US President Donald Trump initially exploring a draft order in August to direct bank regulators to investigate debanking claims<\/a> from crypto firms and conservatives.\u00a0<\/p>\n Related: <\/strong><\/em>SEC allows broker-dealers to take 2% \u2018haircut\u2019 on stablecoins<\/strong><\/em><\/a><\/p>\n It also sought to direct bank regulators to scrap any policies that led banks to cut ties with such clients due to reputational risk.<\/p>\n Trump himself is currently in a $5 billion legal stoush with JPMorgan over debanking, alleging that the firm unlawfully closed his accounts for political reasons back in 2021.\u00a0<\/p>\n <\/p>\n While JPMorgan has argued that the case has no merit, a former executive recently acknowledged in court that the bank had closed Trump\u2019s account following the Jan. 6 Capitol Hill riots.\u00a0<\/p>\n Magazine: <\/strong><\/em>Is China hoarding gold so yuan becomes global reserve instead of USD?<\/strong><\/em><\/a><\/p>\n <\/div>\n The US Federal Reserve is seeking to codify a rule removing \u201creputation risk\u201d from banking supervision, which some have blamed for a wave of crypto debanking in recent years. The Fed initially began making changes in June last year, announcing that it had directed its supervisors to stop pressuring banks to shut down client accounts […]<\/p>\n","protected":false},"author":2,"featured_media":420537,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[235,203,210,234,231,232,237,238,236,233],"class_list":["post-420536","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain","tag-bitcoin","tag-crypto-currency","tag-elon-musk","tag-ethereum","tag-hyperledger","tag-ibm","tag-mining","tag-nodes","tag-spacex","tag-tesla"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/420536","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=420536"}],"version-history":[{"count":1,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/420536\/revisions"}],"predecessor-version":[{"id":420538,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/420536\/revisions\/420538"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/420537"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=420536"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=420536"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=420536"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}