Federal Reserve Proposes Rule to Combat Crypto Debanking Practices

The Federal Reserve has taken a significant step towards addressing debanking, a practice where financial institutions sever ties with customers based on their activities. According to sources, the central bank's proposal aims to remove 'reputation risk' from Fed oversight and prevent supervisors from pressuring banks to cut off disfavored businesses.

The move is seen as a response to cases of discrimination against lawful but politically or financially disfavored companies, including those in the crypto industry. In recent years, several high-profile examples have emerged of financial institutions cutting ties with customers based on their perceived risk or reputation.