Federal Reserve Moves to End Crypto Debanking, Major Relief for Industry

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The U.S. Federal Reserve has taken a major step to improve banking access for crypto companies. The central bank has opened a 60-day public comment period on a new proposal that would stop banks from using “reputation risk” as a reason to deny services to crypto firms. 

The proposal could remove one of the biggest barriers that has limited crypto companies’ access to traditional banking services in recent years.

Federal Reserve Seeks Public Feedback on New Banking Rule

In its official announcement, the Federal Reserve said it is inviting public comments before making the rule final. The proposal focuses on changing how banks supervise clients, making it clear that decisions should be based only on financial risk, not reputation concerns.

This move is widely seen as an effort to end what many in the crypto industry call “Operation Chokepoint 2.0.”

Last year, the Fed had already started moving in this direction by telling supervisors not to pressure banks into closing accounts based on reputation alone. Instead, banks must evaluate customers using measurable financial risks.

U.S. Senator Cynthia Lummis welcomed the Federal Reserve’s proposal and said the change was long overdue. 

Why the Fed Is Changing Policy Now

The Federal Reserve’s move comes at a time when crypto is becoming more integrated with the global financial system. 

The approval of spot Bitcoin ETFs in the United States has already allowed major asset managers like BlackRock, Fidelity, and Franklin Templeton to enter the crypto market. These firms rely heavily on banking infrastructure for custody, settlements, and fund operations.

By removing “reputation risk” from supervision, the Federal Reserve is reducing uncertainty for banks that want to work with crypto companies.

Why This Is Important for Crypto Companies

For years, many crypto companies have struggled to maintain banking relationships. Some banks closed accounts or avoided working with crypto firms due to regulatory uncertainty and risk concerns.

In recent years, several global banks have already started supporting crypto adoption. BNY Mellon now offers crypto custody services for institutional clients, while Standard Chartered has launched digital asset custody through its Zodia Custody platform. 

In the United States, JPMorgan and Goldman Sachs have expanded their blockchain and crypto-related services, signaling growing institutional interest. Meanwhile, banks like HSBC and Citi are also developing digital asset infrastructure.

If the new rule is approved, crypto companies may find it easier to open and maintain bank accounts. This could improve business operations, increase investor confidence, and support industry growth.