Fed suggests regulation to address crypto debanking by eliminating ‘reputation risk’

The proposal aims to reduce the risk associated with Federal Reserve oversight and prevent regulators from pressuring banks to discontinue relationships with less favored businesses, including those in the crypto sector.

The U.S. Federal Reserve Board has taken steps that could mitigate further instances of crypto debanking. (Jesse Hamilton/CoinDesk)

What to know:

• The U.S. Federal Reserve has suggested a regulation that would formalize its earlier decision to eliminate “reputation risk” as a consideration in bank oversight, a factor believed to have played a role in the debanking of crypto individuals and enterprises.
• This initiative, which is open for a 60-day public comment period, would prevent regulators from urging banks to cut ties with politically unpopular businesses.

In this article

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Following JPMorgan Chase & Co.’s acknowledgment of terminating its relationship with President Donald Trump after the events of January 6, 2021, the Federal Reserve is seeking feedback on its proposal to prevent regulatory authorities from persuading banks to end relations with lawful clients based on their actions, including crypto enterprises.

"We have encountered concerning instances of debanking — where regulators utilize fears regarding reputation risk to coerce financial institutions into debanking clients due to their political opinions, religious beliefs, or involvement in disapproved yet lawful businesses," including cryptocurrency, stated Vice Chair for Supervision Michelle W. Bowman.

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"Discrimination by financial institutions based on these criteria is illegal and has no place within the Federal Reserve’s supervisory framework," she further noted.

The Office of the Comptroller of the Currency, acting as the overseer of national banks, had previously worked to remove reputational considerations from its supervision last year, and the Federal Reserve had similarly indicated in July that such risks would no longer be included in its bank assessments, making this regulatory process a formalization of that change.

Instances of crypto debanking have been well documented and readily acknowledged by banking regulators appointed during Trump’s administration, though new cases continue to surface. In response to a lawsuit filed last month by Trump and the Trump Organization, JPMorgan, the largest bank in the U.S., revealed for the first time that it had closed over 50 Trump accounts in February 2021. The bank did not disclose a reason for this account closure. On November 23, 2025, Jack Mallers, CEO of the crypto payment company Strike, posted on social media that JPMorgan had shut all his accounts without justification.

In a memo dated January 26 to the Board of Governors, the Fed’s staff indicated that the board’s proposal would “codify the removal of reputation risk from the Board’s supervisory programs” and disallow the Fed from “encouraging or compelling” banks to deny or restrict services to customers engaged in “politically disfavored yet lawful business activities.”

Within the proposal, the Fed Board expressed its intention to incorporate “permitted payment stablecoin issuers” into its classification of covered banking organizations following the completion of separate regulatory processes, a development that could significantly impact crypto-native businesses seeking to access banking services.

The Fed has stated that feedback on its proposal to eliminate reputation risk from its bank supervision will be accepted for 60 days from February 23.