In its official announcement on February 23, 2026, the US Federal Reserve presented a proposal to ban the use of the concept of “reputational risk” in banking supervision. This initiative aims to prevent financial institutions from closing the accounts of their customers engaged in legal activities, including companies in the blockchain and digital asset sector, based on subjective or political criteria.
The Quest for Objectivity in Banking Audits
The new regulation aims for banks to base their customer relations solely on objective financial risk management. This change aims to separate banks’ decisions regarding their customers from subjective reasons such as whether the sector is preferred or not. Thus, the US Federal Reserve plans to prevent discrimination in sectors that carry out non-illegal activities in banking services.
Structural Change in Administration and Federal Statements
Michelle Bowman, the bank’s vice president of auditing, emphasized that recently there have been cases where auditors put pressure on credit institutions on the grounds of customers’ religious beliefs, political views or legitimate business activities. It is stated that the new rule will clearly prevent auditors from blocking banks’ decisions to work with any customer who operates legally. This step is a continuation of the administrative change initiated last year, which prevents reputation risk from being a tool of punishment for auditors.
Speaking about the regulation, Michelle Bowman points out that it is important for banks to act impartially towards their customers, both for the stability of the sector and for the development of innovation.
Reflections on the Crypto Industry and Reactions from the Industry
Many companies and advocates operating in the cryptocurrency and blockchain space are praising the proposal. Criticisms that the digital asset industry is subject to discriminatory practices at the federal level aim to decrease thanks to the new regulation.
In her post on social media, US Senator Cynthia Lummis emphasized that the Central Bank should stop treating crypto companies as both judge and jury, and stated that she supports the permanent removal of “reputational risk” from the Central Bank policies.
Senator Cynthia Lummis pointed out that the Central Bank’s termination of both its judgmental approach to digital asset companies and “reputational risk”-based practices is an important step taken by the USA towards becoming the center of digital assets.
Alex Thorn from Galaxy Digital, one of the industry figures, stated that this step played a critical role in regressing the efforts to restrict the crypto industry’s access to the traditional financial system, called Chokepoint 2.0.
Additionally, the US Commodity Futures Trading Commission announced that it has created a 35-member Innovation Advisory Committee to address issues related to emerging technologies, with the field of artificial intelligence and blockchain on its agenda. This step is expected to contribute to the regulation of technology-based innovations in financial markets.
