Blockchain Association supports Federal Reserve plan to eliminate 'reputation risk' criterion from banking oversight
A Federal Reserve initiative seeking to officially eliminate reputational risk as a factor in bank supervision has gained support from the Blockchain Association, which argues the change would prevent crypto-related debanking practices and establish uniform, impartial regulatory frameworks.
The Blockchain Association, a prominent cryptocurrency advocacy organization in the United States, has expressed its endorsement of a US Federal Reserve initiative aimed at formalizing the elimination of "reputation risk" as a criterion in banking supervision—a factor that has historically been employed to deny banking services to cryptocurrency businesses.
Through a correspondence submitted on Monday responding to the Fed's call for public input, Ashok Pinto, who serves as the organization's executive vice president overseeing legal and government relations, advocated for transforming the reputation risk removal, which took effect in examination programs during June 2025, into an official regulatory rule.
"The Blockchain Association strongly encourages the Board to move expeditiously to finalize and codify the removal of reputation risk from its supervisory framework," Pinto wrote.
"Regulation is meant to uphold the integrity of our financial system, not to pick winners and losers based on the political winds of the day. Regulated entities are entitled to objective, consistent standards. Reputation risk provides neither," he added.
The concept of reputation risk has previously served as a rationale for denying banking services to cryptocurrency firms and severing their connections to traditional banking infrastructure, forming a key component of what industry observers have labeled "Operation Chokepoint 2.0."
Reputation risk is only as neutral as the administration wielding it
While the current Trump administration has reversed numerous policies that contributed to the debanking of crypto enterprises, Pinto maintained that establishing a formal regulatory framework that permanently removes reputation risk from supervisory protocols is essential, given that a future US administration with a less favorable stance toward cryptocurrency could assume power.
Research conducted by the Cato Institute, a US-based think tank, revealed in January that the majority of debanking incidents occurring in the United States stemmed from governmental pressure rather than independent decisions made by financial institutions.
"Reputation risk is only as neutral as the administration wielding it. The same mechanism used against the digital asset industry under the Biden Administration could be turned against any other lawful business sector under any future administration," Pinto wrote.
"Codifying its removal is a durable, administration-neutral protection for any American business operating lawfully within our financial system."
Final rule should be aligned with other regulators
Simultaneously, Pinto emphasized that the Federal Reserve board ought to ensure its final regulation aligns with corresponding regulatory measures that have been completed by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).
On April 7, both the OCC and FDIC published a final rule establishing the formal removal of reputation risk as a consideration within their respective supervisory frameworks.
"A standard harmonized across federal departments and agencies would provide regulated entities with the clarity and predictability they are owed," Pinto wrote.
"Ensuring that supervision is grounded in objective, consistent, and measurable standards is essential to preserving the safety and soundness of the financial system and maintaining confidence in the impartiality of the regulatory process."