Fed Removes ’Reputational Risk’ Barrier, Potentially Paving Way for Bank Crypto Adoption

The Federal Reserve's decision to eliminate 'reputational risk' from bank examination standards has ignited Optimism across crypto markets. This regulatory shift removes a longstanding obstacle that critics argue was weaponized against digital asset firms during the Biden administration's crackdown on crypto banking relationships.

Major financial institutions including JPMorgan and Bank of America are already deepening their crypto market participation. The move signals growing institutional acceptance, though Custodia Bank founder Caitlin Long cautions that more reforms are needed to completely resolve debanking issues.

Market observers note the policy change coincides with accelerating crypto infrastructure development among traditional banks. The Fed's updated guidance replaces vague reputation concerns with concrete financial risk parameters, creating clearer compliance pathways for regulated entities entering digital assets.