Fed Drops Crypto Crackdown: Reputational Risk Oversight Axed in Landshift Move

The Federal Reserve just bulldozed its own red tape—crypto firms can finally breathe.

Regulatory shackles off

No more 'reputational risk' patrols. The Fed's sudden U-turn scraps years of de facto banking blacklists against crypto-native companies. Suddenly, those 'too risky' deposits look mighty attractive to traditional finance now that yields are collapsing elsewhere.

Wall Street's hypocrisy meter spikes

Remember when Jamie Dimon called Bitcoin a 'fraud'? Now watch JPMorgan scramble to onboard stablecoin issuers by Q3. The Fed's move exposes the worst-kept secret in finance: everyone wants crypto exposure—they just needed bureaucratic cover.

The new rules of the game

Expect a gold rush of crypto-bank partnerships within 60 days. Compliance teams will rebrand 'risk management' as 'innovation facilitation.' And somewhere in Zurich, a private banker just ordered another round of Dom Pérignon—his secret crypto clients are about to go mainstream.

The revolution won't be decentralized—but it will be profitably hypocritical.

“The Board has started the process of reviewing and removing references to reputation and reputational risk from its supervisory materials, including examination manuals, and, where appropriate, replacing those references with more specific discussions of financial risk,” the Fed said in an official statement. “The Board will train examiners to help ensure this change is implemented consistently across Board-supervised banks and will work with the other federal bank regulatory agencies to promote consistent practices, as necessary.”

The Fed previously rated institutions’ reputational risk on the entire spectrum of risks
facing a banking institution, including credit, market, liquidity, operational, and legal risk. The MOVE not only eases banking regulation, but opens the door for lesser crypto regulation and for institutions to operate crypto projects/offerings. Those efforts have also spread to the Securities and Exchange Commission (SEC), which has eased up on its own regulation over crypto firms and the entire industry.

The lesser restrictions on banking institutions have already been welcomed by these institutions and the crypto community as a whole. Several banks are now investing in crypto ETFs to offer to their customers, which has helped crypto prices stay steady. Furthermore, many crypto fans have welcomed the decision already, calling the Fed decision bullish for crypto.