Good news from the Fed for crypto companies: Years-old practice is being lifted
The Fed is lifting the "reputational risk" practice that prevented crypto companies from accessing banking services. With the decision, it is considered that another important obstacle for the sector has been overcome.
The American central bank, the Fed, has announced that it will remove the “reputational risk” practice, which has been negatively affecting cryptocurrency companies for many years. The official statement stated that the reputational risk factor will no longer be taken into account in bank audits.
Accordingly, this term will be removed from audit guidelines and auditors will be trained to focus on specific financial risks. Fed Chairman Jerome Powell said in a session at the Banking Committee in February that they would remove the reputational risk assessment from the guide. Before the Fed, major banking regulators such as the OCC and FDIC made the same decision.
The practice in question prevented crypto companies from accessing banking services. Until now, these companies have often had problems opening accounts or receiving related services at banks because they were considered “high risk” or “potentially damaging to reputation.” One of those who personally voiced these problems was Coinbas CEO Brian Armstrong. Banks have generally preferred not to accept customers from the crypto sector, fearing that they would be warned by the Fed and other regulators due to “reputational risk.”
After the OCC and FDIC, and finally the Fed’s abandonment of this practice, it is expected that the crypto sector’s access to the traditional banking system will become easier. It is thought that this development will provide significant relief for crypto companies in the US in opening accounts and receiving sustainable financial services.
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