Federal Reserve Ends ‘Reputational Risk’ Factor Which Penalized Crypto Banking

The US Federal Reserve has removed reputational risk from its examination programs in supervising US banks. Following the elimination of the factor, the US Fed has joined the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) to ease requirements for banks to dabble in cryptocurrency offerings.

Federal Reserve Ends Reputational Risk Factor In Bank Examinations

According to a press release, the Federal Reserve Board has introduced sweeping changes to its rules on bank supervision. Per the latest update, the Fed will remove reputational risk as a component of examination programs for banks.

The central bank has begun eliminating all references relating to “reputation and reputational risks” in its manuals and handbooks. Going forward, the Federal Reserve reveals that it will substitute the reputational risks references with “specific discussion of financial risks.”

Critics like Senator Lummis criticized the Fed for its stance on banking supervision, particularly on cryptocurrencies. Leaning on the clause of reputational risks, critics note that financial institutions opted not to offer cryptocurrency services to customers

The statement reveals that the Fed will begin training examiners to effect the new changes, hinting at cross-agency collaboration for seamless operations.

This is a breaking story and will be updated as facts become clearer

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Aliyu Pokima

Aliyu Pokima is a seasoned cryptocurrency and emerging technologies journalist with a knack for covering needle-moving stories in the space. Aliyu delivers breaking news stories, regulatory updates, and insightful analysis with depth and precision. When he’s not poring over charts or following leads, Aliyu enjoys playing the bass guitar, lifting weights and running marathons.

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