{"id":471264,"date":"2025-03-25T18:31:41","date_gmt":"2025-03-25T18:31:41","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=471264"},"modified":"2025-03-25T18:32:59","modified_gmt":"2025-03-25T18:32:59","slug":"fdic-ends-use-of-reputational-risk-criteria-crypto-czar-calls-it-a-big-win","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/fdic-ends-use-of-reputational-risk-criteria-crypto-czar-calls-it-a-big-win\/","title":{"rendered":"FDIC ends use of reputational risk criteria, Crypto Czar calls it &#8216;a big win&#8217;"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The Senate Banking Committee announced on March 25 that the Federal Deposit Insurance Corporation (FDIC) will eliminate reputational risk as a component of bank supervision<\/span><span style=\"font-weight: 400;\">. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">White House \u201cCrypto Czar\u201d <a href=\"https:\/\/cryptoslate.com\/people\/david-sacks\/\">David Sacks<\/a> said<\/span><span style=\"font-weight: 400;\"> the FDIC\u2019s decision was a significant correction, and called it &#8220;a big win for crypto. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">He added:<\/span><\/p>\n<blockquote><p><strong>&#8220;In practice, this vague and subjective criteria was used to justify the debanking of lawful crypto businesses through Operation Chokepoint 2.0. Banking criteria should be objective and quantitative, not based on the potential for untrue stories.&#8221;<\/strong><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Operation Chokepoint 2.0 was an allegedly concerted effort by regulators under former President <a href=\"https:\/\/cryptoslate.com\/people\/joe-biden\/\">Joe Biden\u2019s<\/a> administration to prevent banks from engaging with the crypto industry. This included the denial of banking services for crypto-related businesses.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Sacks also credited Senator Tim Scott for leading the legislative effort through the FIRM Act, which aims to codify the removal of reputational risk standards across all federal financial regulators. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Act mandates that institutions cannot be denied access to financial services based on the subjective perception of risk unconnected to a violation of law or regulation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In early March, Scott criticized the use of reputational risk to debunk industries, <\/span><strong><a href=\"https:\/\/x.com\/BankingGOP\/status\/1897784263224836536\">calling it a \u201cweaponization of rules.\u201d<\/a><\/strong><\/p>\n<h2><span style=\"font-weight: 400;\">Following the OCC<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The move comes five days after the Office of the Comptroller of the Currency (OCC)<\/span> <strong><a href=\"https:\/\/occ.gov\/news-issuances\/news-releases\/2025\/nr-occ-2025-21.html\">declared<\/a><\/strong><span style=\"font-weight: 400;\"> it would cease examining regulated institutions for reputational risk and remove references to the term from its supervisory handbook and guidance.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the OCC, regulators never used reputational risk as a blanket justification for supervisory action. Still, its removal is intended to clarify that examinations should focus strictly on operational, legal, and financial risk factors.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In a March 20 announcement, acting Comptroller Rodney E. Hood emphasized that the OCC\u2019s oversight should be rooted in banks\u2019 risk management processes, not public perception of particular business activities.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Win for crypto<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Representative <a href=\"https:\/\/cryptoslate.com\/people\/french-hill\/\">French Hill<\/a>, vice chair of the House Financial Services Committee, echoed Sacks' sentiment, calling the move a positive development for the industry in the US.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">He<\/span> <strong><a href=\"https:\/\/x.com\/FinancialCmte\/status\/1904552447550329041\">added<\/a><\/strong><span style=\"font-weight: 400;\">:<\/span><\/p>\n<blockquote><p><span style=\"font-weight: 400;\">\u201cUnder the Biden Administration, the FDIC was wasting resources targeting crypto firms instead of focusing on their core mission. Now, Acting Chair Travis Hill and the Trump Admin are working to right the ship.\u201d<\/span><\/p><\/blockquote>\n<p><span style=\"font-weight: 400;\">Matthew Sigel, head of digital assets research at <a href=\"https:\/\/cryptoslate.com\/companies\/vaneck\/\">VanEck<\/a>,<\/span> <strong><a href=\"https:\/\/x.com\/matthew_sigel\/status\/1904528394542288930\">celebrated<\/a><\/strong><span style=\"font-weight: 400;\"> the FDIC\u2019s decision as a &#8220;big win against Chokepoint 2.0.&#8221; He added that removing reputational risk means &#8220;fewer excuses to debank industries they don\u2019t like.&#8221;<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/cryptoslate.com\/people\/nic-carter\/\">Nic Carter<\/a>, partner at Castle Island Ventures and co-founder of blockchain data aggregator Coinmetrics.io, said<\/span><span style=\"font-weight: 400;\"> reputational risk is \u201ca circular mechanic that allows bank regulators to cut off any industry they dislike.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/cryptoslate.com\/companies\/galaxy-digital\/\">Galaxy Digital's<\/a> James Kibbie<\/span> <strong><a href=\"https:\/\/x.com\/JamesKibbie\/status\/1904578993510113347\">said<\/a><\/strong><span style=\"font-weight: 400;\"> it is very encouraging to see President <a href=\"https:\/\/cryptoslate.com\/people\/donald-trump\/\">Donald Trump\u2019s<\/a> administration taking steps to eliminate vague and subjective policies and stop Operation Chokepoint 2.0.\u00a0<\/span><span style=\"font-weight: 400;\">He added that the usage of reputational risk has significantly hindered &#8220;American innovation.&#8221;<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Senate Banking Committee announced on March 25 that the Federal Deposit Insurance Corporation (FDIC) will eliminate reputational risk as a component of bank supervision. White House \u201cCrypto Czar\u201d David Sacks said the FDIC\u2019s decision was a significant correction, and called it &#8220;a big win for crypto. He added: &#8220;In practice, this vague and subjective [&hellip;]<\/p>\n","protected":false},"author":1511,"featured_media":471272,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,77968,79915,77644,11],"tags":[],"post_folder":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.9 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>FDIC ends use of reputational risk criteria, Crypto Czar calls it &#039;a big win&#039;<\/title>\n<meta name=\"description\" content=\"The FDIC&#039;s decision follows an identical movement by the OCC on March 20, potentially prompted by criticism from crypto industry figures.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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