BREAKING: US Fed Silently Dismantles Key Crypto Banking Hurdle – Here’s Why It Matters
The Federal Reserve just pulled a quiet power move—and crypto just got a backdoor into traditional finance.
No press conferences. No regulatory fireworks. Just a calculated shift that lets banks wade deeper into digital assets without the usual hand-wringing.
The buried lede:
For years, banks faced arbitrary capital requirements that treated crypto holdings like radioactive waste. Now? The Fed’s updated guidance scraps those punitive measures—effectively greenlighting balance sheets to absorb more blockchain exposure.
Why Wall Street won’t admit it’s bullish:
Institutional players still publicly scoff at Bitcoin while quietly repositioning custody solutions. Classic finance hypocrisy—like a vegan butcher selling ribeyes under the counter.
This isn’t just about custody. It’s liquidity pipelines, collateralized loans against digital assets, and eventually—inevitably—crypto-denominated credit lines. The gears are turning.
The cynical kicker:
Watch how fast ‘too risky’ becomes ‘strategic allocation’ once banks smell fee revenue. The same suits who mocked crypto are now recalculating their bonus pools.
Implications for Crypto and the End of ‘Debanking’?
The elimination of reputational risk from federal bank supervision comes after growing pressure from lawmakers and industry participants who argue that digital asset firms have been unfairly excluded from essential financial services.
The crypto industry has long faced hurdles in establishing reliable banking relationships, particularly after the 2022 collapse of FTX, which led to heightened regulatory scrutiny.
Many in the industry cited instances where banks severed ties with crypto businesses under the justification of reputational risk, a process sometimes referred to as “debanking.”
The situation intensified amid claims of coordinated efforts by US regulators to discourage banking relationships with crypto firms, a scenario dubbed “Operation Chokepoint 2.0” by Castle Island Ventures co-founder Nic Carter.
The term draws from a similar initiative a decade ago, where regulators allegedly pressured banks to cut off services to legally operating but politically sensitive sectors.
The Federal Reserve’s latest MOVE aligns with recent actions by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), both of which have also taken steps to remove reputational risk considerations from their oversight procedures.
Legislative Support and Industry Response
The decision by the Federal Reserve has been welcomed by key political figures, including Wyoming Senator Cynthia Lummis, a vocal supporter of digital assets.
In a recent post on X, Lummis called the policy change “a win,” but emphasized that further work is needed to create a stable and fair banking environment for all industries, including crypto.
In February, I exposed the Fed’s aggressive reputation risk policies that assassinated American Bitcoin & digital asset businesses. Today, the Fed announced it will scrap reputation risk as a factor in its bank supervision. This is a win, but there is still more work to be done. https://t.co/AOZSr0IFcp pic.twitter.com/1FtsIcNJsI
— Senator Cynthia Lummis (@SenLummis) June 23, 2025
The policy shift also follows a bill introduced in March by Senate Banking Committee Chair Tim Scott aimed at codifying the exclusion of reputational risk from bank examinations.
While this change doesn’t automatically open the doors for crypto firms to access banking services, it signals a shift in tone that could lead to greater financial inclusion for digital asset companies.
If implemented consistently, this revision could also encourage banks to re-evaluate previously halted partnerships and explore new service models that incorporate blockchain and digital asset technologies in a compliant and structured manner.
Featured image created with DALL-E, Chart from TradingView
