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On June 23, 2025, the Federal Reserve formally removed "reputational risk" from its bank supervision framework—aligning with recent moves by the FDIC and OCC. This means banks no longer face a subjective barrier when considering crypto-related services like custody, trading, or stable coin activity fdic.gov+15axios.com+15cryptoslate.com+15.


🔍 What This Means

Banks now have explicit permission to choose crypto firms as customers and offer crypto-related services—so long as they meet standard requirements for capital, liquidity, compliance, and risk management cryptoslate.com.


The outdated requirement to notify regulators or gain subjective “non-objection” approval has been scrapped—banks fall under regular supervision instead jonesday.com+1federalreserve.gov+1.

Fed Chair Powell emphasized banks can engage with crypto responsibly, echoing earlier calls during his House testimony on June 24 reuters.com+11cryptoslate.com+11bitcoinist.com+11.


✅ Policy Shift in a Nutshell
Before After

Banks needed prior approval or notification, often blocked due to vague reputational concerns

Banks can freely offer services like crypto custody, trading, and stablecoins within sound risk frameworks

"Reputational risk" used as a tool to dissuade engagement with crypto

lRemoved—banks now assessed on measurable risks only (financial, credit, legal)

A patchwork of cautionary guidance across regulators

Coordinated regulatory stance across Fed, FDIC, and OCC

🔮 Why It Matters

Boost for U.S. innovation: Reduces red tape, enabling banks to integrate crypto more seamlessly.

Regulatory clarity: Firms and banks now have clearer rules under standard safety and compliance requirements.

However, banks still must manage traditional risks—the change isn’t deregulation, merely a reallocation of how risks are assessed investopedia.com+10cryptoslate.com+10cryptoslate.com+10zycrypto.com+4theblock.co+4axios.com+4reuters.comfederalreserve.gov+15fdic.gov+15cryptoslate.com+15.





📌 Bottom Line

Yes—the Fed has effectively allowed banks to offer crypto services, removing a major pretext for blocking such activity. Banks can now serve crypto clients and offer related services, provided they operate safely within existing regulations.