In a significant policy shift reflecting the evolving landscape of financial services, the U.S. Federal Reserve (Fed) has announced the removal of its guidance that previously imposed restrictions on banks offering services to crypto-related businesses based on "reputational risk." This move aligns the Fed’s stance with that of the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), both of which had already taken steps to eliminate similar barriers.
Background: The Issue of "Reputational Risk"
For years, U.S. banking regulators, including the Fed, FDIC, and OCC, have scrutinized banks’ relationships with industries perceived as high-risk. Crypto firms often fell into this category, not necessarily due to regulatory violations but largely because of perceived risks to a bank’s reputation. This environment led to reduced access to basic financial services for many legitimate crypto businesses, including difficulties opening accounts, accessing payment networks, or obtaining loans.
Critics argued that such policies effectively denied banking services based on subjective judgments rather than clear legal or compliance grounds. This created friction in the growth of the digital asset sector in the U.S. and forced some businesses to look overseas for banking relationships.
The Fed's New Policy Direction
On June 2025, the Federal Reserve issued updated supervisory guidance explicitly stating that banks are no longer discouraged from providing services to crypto businesses purely based on reputational risk considerations. The updated guidance emphasizes that:
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Risk management should focus on actual financial, operational, and compliance risks, rather than speculative or reputational concerns.
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Banks are expected to apply robust risk assessment and controls when dealing with any business sector, including crypto-related clients.
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Supervisory evaluations will be based on how well a bank manages risks, not on the nature of its customers’ industries, provided those industries operate legally.
This change reflects growing recognition that blockchain technology and digital assets are becoming mainstream elements of the financial system, and blanket barriers only hamper innovation and competitiveness.
Alignment with the FDIC and OCC
The Fed’s move follows the FDIC’s and OCC’s earlier announcements (in late 2024) clarifying that their supervised institutions are not prohibited from offering services to lawful crypto businesses. Both agencies also reaffirmed that banks should base their decisions on risk assessments specific to individual clients rather than industry stereotypes.
Implications for Banks and the Crypto Sector
This policy update is expected to have wide-reaching effects:
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Enhanced access to banking services: Legitimate crypto firms will find it easier to establish and maintain banking relationships in the U.S.
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Clearer regulatory expectations: Banks now have firmer guidance on how to manage risks associated with crypto clients without fear of regulatory backlash over reputational issues.
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Strengthened U.S. competitiveness: The move may help prevent the outflow of crypto businesses to jurisdictions with more supportive banking environments.
Challenges Ahead
While the lifting of the "reputational risk" barrier is a positive development for the crypto industry, it does not mean that crypto businesses will have carte blanche access to banking services. Financial institutions will still need to ensure:
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Comprehensive anti-money laundering (AML) and know-your-customer (KYC) controls
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Strong cybersecurity and fraud prevention measures
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Ongoing monitoring to detect and manage evolving risks
Moreover, banks must stay alert to broader regulatory changes as lawmakers and regulators continue to shape the rules governing digital assets.
Conclusion
The Federal Reserve’s decision to align with the FDIC and OCC by removing "reputational risk" as a factor in supervisory expectations marks a significant step toward normalizing banking services for crypto firms in the U.S. It demonstrates a shift from subjective barriers to risk-based oversight, balancing innovation with the need for sound risk management.
As crypto and blockchain technologies continue to integrate into the mainstream financial system, this policy change may pave the way for greater collaboration between traditional banking institutions and the digital asset sector.