Blockchain Association Presses Federal Reserve To Codify Removal Of Reputation Risk From Bank Supervision

A U.S. crypto lobbying group is pressing the Federal Reserve to formalise the end of “reputation risk” in bank supervision, arguing the concept has been used to restrict access to financial services for crypto firms.

“Crypto lobby backs formal removal of ‘reputation risk’ from bank examinations The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp”

Cointelegraph

In a letter sent Monday in response to the Fed’s request for comment, Blockchain Association executive vice president of legal and government relations Ashok Pinto urged the Board to “move expeditiously to finalize and codify the removal of reputation risk from its supervisory framework.”

Cointelegraph

Pinto said “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,” and added that “Regulated entities are entitled to objective, consistent standards. Reputation risk provides neither.”

The push comes as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. finalized a similar rule removing reputation risk earlier this month, and as the Federal Reserve has a proposal to codify the removal of “reputation risk” from its supervision of banks.

The sources say reputation risk was removed as a component of examination programs in June 2025, and the Blockchain Association wants that change turned into a binding rule.

Pinto also argued that the Fed should align its final rule with parallel rulemakings finalized by the OCC and FDIC, including a joint rule issued on April 7.

The lobbying effort is framed as a safeguard against future policy reversals, with Pinto warning that the mechanism can be reused against other lawful businesses under a different administration.

Blockchain Association’s argument is that “reputation risk” has not operated as a neutral supervisory factor, but instead has been used to justify debanking crypto companies and cutting off their access to banking rails.

The sources connect that practice to what industry participants have dubbed “Operation Chokepoint 2.0,” describing reputation risk as part of the rationale for restricting banking access.

crypto.news

Pinto’s letter says “Reputation risk has been used in the past to justify debanking crypto companies and cutting off their access to banking rails,” and the same framing appears in multiple accounts of the lobbying effort.

The group also points to the political nature of the concept, writing that “Reputation risk is only as neutral as the administration wielding it.”

In the Cointelegraph and crypto.news accounts, Pinto warns that “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.”

The Cato Institute is cited in the sources as providing support for the claim that debanking outcomes often stem from government pressure rather than independent bank decisions.

Across the accounts, Pinto’s emphasis is that regulation should be grounded in objective, consistent standards rather than subjective assessments tied to supervisory discretion.

The Blockchain Association’s letter and related commentary place the Fed’s rulemaking in a broader pattern of enforcement and policy shifts, arguing that safeguards are needed even after the Trump administration “walked back many of the policies that led to crypto debanking.”

“Crypto lobby backs formal removal of ‘reputation risk’ from bank examinations US crypto lobby group Blockchain Association has thrown its support behind the US Federal Reserve’s proposal to codify the removal of “reputation risk” from its supervision of banks, which has been used in the past to debank crypto companies”

TradingView

In the Cointelegraph account, Pinto argues that “a concrete set of rules removing reputation risk from supervisory programs is needed because another, less crypto-friendly US government could come to power in the future.”

The sources also say the Cato Institute found in January that most debanking cases were driven by government pressure rather than banks’ own policies, reinforcing the group’s view that supervisory discretion can be influenced externally.

One account quotes Pinto writing that “Codifying its removal is a durable, administration-neutral protection for any American business operating lawfully within our financial system.”

Another account frames the same concern as “Concerns over future policy reversals,” stating that Pinto warned future administrations could reintroduce similar measures without clear regulatory limits.

The crypto.news account explicitly ties the concern to the idea that “future administrations could reintroduce similar measures without clear regulatory limits,” and it repeats Pinto’s warning that “reputation risk is only as neutral as the administration wielding it.”

Taken together, the sources depict the Fed’s codification as a response to the possibility that reputation risk could be reintroduced as a supervisory rationale under a different administration.

A central part of the Blockchain Association’s request is regulatory alignment, with Pinto urging the Federal Reserve to harmonize its final rule with steps already taken by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.

The sources say the OCC and FDIC issued a final rule on April 7 to codify the removal of reputation risk from their supervisory programs.

Cointelegraph

In the Cointelegraph account, Pinto said the Fed board should align its final rule with parallel rulemakings finalized by the OCC and FDIC, and he argued that “A standard harmonized across federal departments and agencies would provide regulated entities with the clarity and predictability they are owed.”

The same language appears in the TradingView account, which also attributes the April 7 action to the OCC and FDIC.

The crypto.news account similarly says Pinto pointed to “recent actions by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation” and that the agencies “issued a joint rule on April 7 removing reputation risk from their supervisory frameworks.”

Pinto’s letter, as described in the sources, argues that a harmonized standard would improve predictability and trust in the regulatory process.

Across the accounts, the emphasis is that supervision should be grounded in “objective, consistent, and measurable standards,” and that a harmonized approach would preserve safety and soundness.

The sources portray the Blockchain Association’s intervention as a direct attempt to shape the Federal Reserve’s supervisory framework by codifying the removal of reputation risk.

In each account, the group frames its action as support for the Fed’s proposal to codify the removal of “reputation risk” from its supervision of banks, which has been used in the past to debank crypto companies.

crypto.news

Cointelegraph and TradingView both describe the letter as urging the Board to “move expeditiously to finalize and codify the removal of reputation risk from its supervisory framework,” and both include Pinto’s argument that “Regulated entities are entitled to objective, consistent standards. Reputation risk provides neither.”

The crypto.news account adds that Pinto urged the Fed to “formalise the removal of ‘reputation risk’ from bank supervision rules,” and it says the group warned that the concept has been used to restrict access to financial services.

The sources also tie the request to the Fed’s June 2025 policy change, saying reputation risk was removed as a component of examination programs in June 2025 and should be made a binding rule.

The accounts further say Pinto wants the Fed to align with the OCC and FDIC, which already issued a final rule on April 7, and the sources describe the OCC and FDIC as having finalized a similar rule removing reputation risk earlier this month.

While the sources do not specify the Fed’s decision timeline, they clearly identify the action being requested: finalize and codify the removal so that supervision relies on objective, consistent, and measurable standards rather than reputation-based discretion.