U.S. crypto lobbying group Blockchain Association has urged the Federal Reserve to formalise the removal of “reputation risk” from bank supervision rules, warning that the concept has been used to restrict access to financial services.

 

In a comment letter submitted Monday, Blockchain Association executive vice president of legal and government relations Ashok Pinto said the Federal Reserve should turn its June 2025 policy change into a binding rule to prevent future misuse. 

 

He wrote that “regulation is meant to uphold the integrity of our financial system, not to pick winners and losers based on the political winds of the day,” while warning that reliance on reputation risk introduces inconsistency into supervisory practices.

 

Concerns over future policy reversals

 

Citing past enforcement patterns, Pinto said the use of reputation risk has contributed to debanking actions targeting crypto firms, often described by industry participants as “Operation Chokepoint 2.0.” 

 

He noted that while the Donald Trump administration has rolled back several policies linked to crypto debanking, long-term safeguards remain necessary.

 

Push for regulatory alignment

 

Addressing implementation, Pinto said the Federal Reserve should coordinate its final rule with steps already taken by other banking regulators. He pointed to recent actions by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, which issued a joint rule on April 7 removing reputation risk from their supervisory frameworks.

 

Pinto wrote that aligning standards across agencies would improve predictability for regulated entities, adding that consistent rules grounded in measurable criteria are necessary to maintain trust in the regulatory process and ensure the safety of the financial system.

View sources:  Blockchain Association presses Fed to formalize end of reputation risk in bank oversight