The US Federal Reserve is proposing to codify a rule that would eliminate 'reputation risk' from banking supervision. This move comes amid widespread concerns from the cryptocurrency industry about a wave of 'debanking' over the past few years.
Vice Chair for Supervision Michelle Bowman stated that the Fed has heard troubling cases where supervisors pressured financial institutions to debank customers based on political views, religious beliefs, or participation in lawful but disfavored businesses. Bowman emphasized that such discrimination is unlawful and has no place in the Federal Reserve’s supervisory structure.
The Fed began making changes in June 2025, directing supervisors to stop pressuring banks to close client accounts over reputation risk, asserting that decisions should be based solely on financial risk management. The central bank is now seeking public feedback on the proposal, with a two-month deadline for comments.
Members of the crypto industry have used the term 'Operation Chokepoint 2.0' to describe what they perceived as a coordinated effort by the US government and banking sector to deny crypto companies access to traditional banking services.