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The Federal Reserve has officially removed its “reputational risk” guideline, a key regulatory tool that previously discouraged banks from engaging with crypto firms.
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This decision follows the FDIC’s similar move earlier in the year, signaling a significant shift away from institutional debanking of the cryptocurrency sector.
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According to COINOTAG sources, this regulatory change paves the way for more objective bank evaluations of crypto clients and fosters potential collaboration between traditional finance (TradFi) and Web3.
Federal Reserve eliminates “reputational risk” guideline, ending crypto debanking era and encouraging clearer, evidence-based bank supervision for digital asset clients.
Federal Reserve Ends “Reputational Risk” Rule, Ushering in New Era for Crypto Banking
The Federal Reserve’s recent removal of the “reputational risk” guideline marks a pivotal moment in the relationship between banks and the cryptocurrency industry. Historically, this guideline served as a discretionary tool allowing regulators to discourage banks from servicing crypto firms based on subjective reputational concerns rather than concrete financial risks. By eliminating this rule, the Fed is signaling a move towards transparent, evidence-based supervision that prioritizes measurable financial safety and soundness over ambiguous reputational factors.
This change aligns the Fed with other regulators like the FDIC, which scrapped a similar rule in March 2025. The cumulative effect of these regulatory shifts is a dismantling of the institutional barriers that fueled the widespread debanking of crypto companies during the past several years. As a result, banks can now approach crypto clients with more confidence and clarity, potentially accelerating the integration of digital assets into mainstream finance.
Impact on Institutional Crypto Adoption and TradFi Collaboration
Removing the “reputational risk” guideline is expected to have a profound impact on institutional crypto adoption. Banks previously faced significant regulatory uncertainty when evaluating crypto-related clients, often leading to blanket refusals to engage with the sector. With this obstacle removed, financial institutions can conduct more objective risk assessments based on verifiable data rather than subjective reputational concerns.
Industry experts note that several major investment banks have already expressed interest in expanding their crypto-related services. This regulatory update could serve as a catalyst for these institutions to deepen their involvement in digital asset markets, fostering greater collaboration between traditional finance and Web3 ecosystems. Such partnerships may enhance liquidity, improve infrastructure, and contribute to the maturation of the crypto industry.