The US-based crypto advocacy group Blockchain Association has backed the Federal Reserve’s proposal to formally eliminate “reputation risk” from its bank supervision framework—a factor critics say has previously been used to justify cutting off services to crypto firms.
In a letter submitted Monday in response to the Fed’s request for comment, Ashok Pinto, the association’s executive vice president of legal and government relations, urged regulators to make the change permanent. Reputation risk had already been removed from examination programs in June 2025 but has yet to be formally codified.
“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.
He added that regulation should ensure the integrity of the financial system without favoring or disadvantaging specific industries. “Regulated entities are entitled to objective, consistent standards. Reputation risk provides neither,” he said.
In the past, “reputation risk” has been cited to justify debanking crypto firms and restricting their access to financial services—an approach often referred to as “Operation Chokepoint 2.0.”
‘Reputation risk’ depends on who’s in power
While the Trump administration has rolled back several policies linked to crypto debanking, Pinto argued that formally removing reputation risk from supervisory frameworks is essential to prevent similar actions under future governments that may be less supportive of the industry.
A January report from the Cato Institute found that most debanking incidents in the US were driven by government pressure rather than independent decisions by banks.
“Reputation risk is only as neutral as the administration wielding it,” Pinto wrote, warning that the same tool used against the digital asset sector under the Biden administration could just as easily be applied to any lawful industry under a different administration.
“Codifying its removal is a durable, administration-neutral protection for any American business operating lawfully within our financial system.”
Final rule should align with other regulators
Pinto also urged the Federal Reserve to ensure its final rule is consistent with similar actions taken by other regulators, including the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).
Both the OCC and FDIC finalized a rule on April 7 removing reputation risk from their supervisory frameworks.
“A harmonized standard across federal agencies would give regulated entities the clarity and predictability they deserve,” 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.”
