FDIC Removes ‘Reputational Risk,’ Easing Banking Access for Crypto

March 26, 2025

The Federal Deposit Insurance Corporation (FDIC) has eliminated “reputational risk” from its bank supervision criteria, a policy shift that could make it easier for crypto firms to access banking services.

In a post on X, the U.S. Senate Banking Committee confirmed the FDIC’s decision, stating that it follows the passage of Senator Tim Scott’s Financial Integrity and Regulation Management (FIRM) Act, which aims to eliminate reputational risk considerations across all federal banking regulators.

The Senate Banking Committee has approved the FIRM Act with a 13-11 party-line vote. The legislation aims to ensure that banks make decisions based on concrete financial and regulatory criteria rather than subjective concerns about how certain clients or industries are perceived.

The bill is particularly relevant for businesses in industries like digital assets, firearms, and energy, which have faced difficulties accessing banking services due to regulatory pressure.

By codifying the removal of reputational risk from banking oversight, the FIRM Act is designed to promote fairness and prevent regulators from influencing banks to cut ties with lawful businesses.

White House AI and Crypto Czar, David Sacks called the move a “big win for crypto”. Sacks shared that the term “reputational risk” was previously defined as the possibility that negative publicity—whether accurate or not—could lead to financial harm, including customer losses, legal expenses, or reduced revenue.

However, critics argue that this broad and subjective standard was used to justify denying banking services to lawful cryptocurrency businesses, particularly under what has been referred to as “Operation Chokepoint 2.0.”

Many in the industry have called for banking regulations to rely on clear, objective, and quantifiable criteria rather than speculative concerns over public perception.

The FDIC’s policy change aligns it with the Office of the Comptroller of the Currency (OCC), which implemented a similar measure on March 20 to remove reputational risk as a factor in banking supervision.

Furthermore, the financial regulator’s move along with the OCC’s earlier action, signals a broader effort to create a clearer and more consistent regulatory environment, particularly for industries like crypto that have faced banking challenges in the past.

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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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