New Fed Plan Could Ease Banking Access for Crypto Firms

On February 23, 2026, the Federal Reserve unveiled a formal proposal to permanently eliminate “reputation risk” from its bank supervisory framework – a concept long criticized by crypto firms and some lawmakers as a backdoor tool for discouraging banks from serving certain legal industries.

The proposal is widely viewed as a direct response to years of tension between regulators and cryptocurrency companies, which have argued they were quietly cut off from essential banking services despite operating within the law.

What Is Changing

At the core of the proposal is a clear directive: bank examiners would no longer be allowed to penalize or discourage financial institutions from serving customers engaged in lawful activity based on reputational concerns.

Instead, supervisory evaluations would focus strictly on measurable financial risk – including safety, soundness, liquidity, capital adequacy, and compliance with established laws. Subjective judgments about public perception or political sensitivity would no longer form part of the official review framework.

The move formalizes a policy direction that began shifting in mid-2025 and now seeks to lock that change into binding regulation. The Fed has opened a 60-day public comment window, running through late April 2026, before finalizing the rule.

Operation Choke Point 2.0 Under Pressure

Within the digital asset community, the initiative is seen as the closing chapter of what critics labeled “Operation Choke Point 2.0” – an alleged pattern of regulatory pressure that discouraged banks from working with crypto-related businesses.

Industry participants have long argued that informal supervisory signals led banks to quietly terminate accounts or avoid onboarding crypto clients altogether, even when those businesses complied with existing laws. By removing “reputation risk” as a supervisory factor, the Fed appears to be signaling that lawful activity alone cannot justify regulatory friction.

Political and Industry Reactions

Federal Reserve Vice Chair for Supervision Michelle Bowman emphasized that discrimination against legal businesses based on political or religious considerations is unlawful. Her remarks reinforced the Fed’s position that supervision should remain grounded in objective financial risk metrics.

Lawmakers supportive of digital asset innovation welcomed the proposal, including Senator Cynthia Lummis, who has consistently argued that regulators should not block crypto firms from accessing banking services simply because of their industry.

Major crypto firms and advocacy groups described the move as a breakthrough moment that could normalize digital assets within the traditional financial system. Companies such as Galaxy Digital have previously pointed to banking access as one of the largest structural bottlenecks facing the sector.

Meanwhile, large financial institutions – including JPMorgan, Goldman Sachs, and BNY Mellon – have reportedly been expanding their blockchain infrastructure and custody capabilities, positioning themselves for broader digital asset integration under clearer regulatory guardrails.

Potential Impact on Crypto and Banks

If finalized, the rule could significantly reduce regulatory uncertainty for banks considering crypto clients. The removal of reputational scrutiny would likely reduce the fear of informal supervisory backlash, making institutions more comfortable maintaining or opening accounts for digital asset businesses.

For crypto startups and established firms alike, easier access to core banking services – including payroll, tax payments, and settlement accounts – could remove a longstanding operational hurdle.

Greater clarity may also encourage more traditional banks to expand into custody, settlement, and ETF servicing tied to Bitcoin and other digital assets, potentially accelerating institutional participation in the broader crypto ecosystem.

The coming weeks will determine whether public feedback alters the final structure of the rule. But for now, the Federal Reserve’s proposal marks one of the most direct regulatory signals yet that lawful crypto activity should not be sidelined by supervisory interpretation alone.

The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.

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