The Federal Reserve Board of Governors has proposed a rule to formally remove 'reputation risk' from its bank supervision standards, marking a shift aimed at ending the controversial practice known as Operation Chokepoint 2.0.
The proposal would require examiners to focus on concrete financial risks such as credit, liquidity, and compliance issues rather than subjective concerns about a bank's public image.
Supporters of the regulatory shift say it will make supervision more predictable and fairer for all lawful sectors, not just cryptocurrency firms. Critics have accused federal regulators and bank supervisors of pressuring banks to cut off services to these firms by invoking vague reputational concerns.