The Federal Reserve has opened a 60-day public comment period to permanently remove “reputation risk” from bank supervision. The proposal aims to prevent regulators from discouraging banks from serving lawful but politically sensitive sectors, including digital asset firms.
The move would codify a June 2025 clarification that reputation risk should not factor into examination programs. The Fed said supervisory decisions should instead focus on material financial risks and clearer, more precise assessments. The change formalizes guidance that banks should not be penalized for serving customers engaged in lawful activities.
Will This End Crypto Debanking Claims?
Vice Chair for Supervision Michelle W. Bowman said the Fed had heard “troubling cases of debanking,” where supervisors pressured institutions over customers’ political views or involvement in disfavored but lawful businesses.
“Such discrimination does not have a role in the Federal Reserve's supervisory framework,” Bowman said in a press release.
It’s not the Fed’s role to play both judge and jury for banking digital asset companies. Glad to see this important step to permanently remove “reputation risk” from Fed policy and put Operation Chokepoint 2.0 to rest so America can become the digital asset capital of the world. pic.twitter.com/G6rUnXtCSw
— Senator Cynthia Lummis (@SenLummis) February 23, 2026
The policy shift follows sustained criticism from crypto executives and lawmakers who have described prior oversight practices as “Operation Choke Point 2.0.”
Senator Cynthia Lummis welcomed the proposal, writing on X that it is not the Fed’s role to act as “judge and jury” for digital asset companies. The Senate Banking Committee’s GOP account also endorsed the change, calling it a major step toward ending debanking. The debate unfolds amid heightened political tension, including President Donald Trump’s $5 billion lawsuit against JPMorgan Chase over account closures in 2021, which the bank says lacks merit.
Chairman @SenatorTimScott applauds the Fed’s move to codify its removal of reputational risk from supervision.
— U.S. Senate Banking Committee GOP (@BankingGOP) February 24, 2026
No American should lose access to banking services because of their political views, faith, or lawful business.
This is a major step toward ending debanking. https://t.co/xWthCsDCWE
For crypto firms seeking stable banking access, the proposal signals a potential shift from reputational judgments to balance-sheet risk analysis. Still, the outcome depends on how examiners implement the policy in practice and whether other regulators adopt similar standards. Market participants will now watch the Federal Register publication and comment submissions for signs of broader interagency alignment.
