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Crypto Sector Scores Major Banking Win as Fed Drops ‘Reputational Risk’ Scrutiny
The crypto industry just scored a long-awaited victory. On Monday, the Federal Reserve officially removed “reputational risk” from its bank examination framework, aligning with the FDIC and OCC in a move that clears a significant regulatory hurdle for financial institutions serving the crypto sector. The decision instantly sparked a rally in cryptocurrencies, as the door to broader banking access swung open.
A Shift Years in the Making
For years, crypto companies have been boxed out of traditional banking—not because of fraud or instability, but due to how regulators perceived public image. Under the now-abolished “reputational risk” standard, banks risked regulatory scrutiny for working with perfectly legal but controversial sectors, particularly crypto.
That all changed Monday when the Federal Reserve announced it will “review and remove references to reputation and reputational risk from its supervisory materials.” The Fed said those references will be replaced with “more specific discussions of financial risk.”
@federalreserve announces that reputational risk will no longer be a component of examination programs in its supervision of banks: https://t.co/7Gwn1UuyNx
— Federal Reserve (@federalreserve) June 23, 2025
U.S. Senator Cynthia Lummis, a leading voice for digital asset legislation, praised the move, writing on X:
In February, I exposed the Fed’s aggressive reputation risk policies that assassinated American bitcoin & digital asset businesses. Today, the Fed announced it will scrap reputation risk as a factor in its bank supervision. This is a win, but there is still more work to be done.
Crypto Markets React Swiftly
The response from crypto markets was immediate. Bitcoin (BTCUSD) surged more than 5% within hours of the announcement. Ethereum (ETHUSD) jumped 10%, nearing the $2,500 mark. Other major tokens joined the rally: Cardano (ADAUSD), Solana (SOLUSD), Binance (BNBUSD), and XRP (XRPUSD) all posted strong gains as traders digested the Fed’s reversal.
The global crypto market cap rose by nearly 3%, topping $3.3 trillion. Coming just one day after markets plunged due to geopolitical tension in the Middle East, the timing amplified the rebound.
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End of Operation Chokepoint 2.0?
The reputational risk framework became the centerpiece of what critics dubbed “Operation Chokepoint 2.0”—a de facto campaign to deny crypto companies access to banking. Following the collapse of several crypto-friendly banks in 2023, more than 30 digital asset and tech firms were reportedly debanked without warning or explanation.
The Fed’s latest move effectively dismantles that practice.
Caitlin Long, CEO of Custodia Bank and one of the industry’s most vocal advocates for fair banking access, commented on X:
ONE KEY STEP toward ending #debanking & #OperationChokePoint2.0
but some of the tools used to effectuate that sad chapter in banking history are still in place. More to do. Keep going @SenLummis, @SenatorTimScott & @BankingGOP!https://t.co/fgGf5KgcIM
— Caitlin Long
(@CaitlinLong_) June 23, 2025
Regulatory Consistency on the Rise
The Federal Reserve now joins the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), which had already withdrawn reputational risk language from their supervisory practices.
Together, the three agencies’ coordinated stance sends a strong signal: banks will no longer be penalized for servicing legal businesses—crypto included—based on image concerns.
Rob Nichols, president and CEO of the American Bankers Association, welcomed the update, stating:
The change will make the supervisory process more transparent and consistent. We have long believed banks should be able to make business decisions based on prudent risk management and the free market, not the individual perspectives of regulators.
What Comes Next
This policy shift doesn’t mean banks will immediately flood into crypto partnerships. Institutions will still be expected to evaluate legal, operational, and financial risk. But the subjective filter—“Will this make us look bad?”—has been removed.
That one change could finally usher in a new era of stable, U.S.-based banking services for crypto companies, from startups to giants. And with Bitcoin, Ethereum, Solana, and the rest pushing higher, markets are betting on that transformation.
The question now is how quickly banks will act—and how the crypto sector will capitalize on its clearest path yet to mainstream financial integration.
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