FDIC Drops Reputational Risk, A Win for Crypto

• FDIC ends use of “reputational risk” in bank supervision.
• Move aligns with OCC and reduces bias against crypto firms.
• David Sacks calls it a major victory for the crypto sector.

A Shift in Regulatory Tone

In a major change of direction, the Federal Deposit Insurance Corporation (FDIC) has announced it will no longer use “reputational risk” as a factor in bank supervision. This term had previously been criticized for giving regulators broad discretion to discourage banks from working with industries deemed politically sensitive—crypto being a prime target.

This update brings the FDIC’s stance in line with the Office of the Comptroller of the Currency (OCC), which had already backed away from such subjective criteria. The move is widely seen as a shift away from the controversial Operation Chokepoint 2.0, a campaign critics say unfairly pressured banks to cut ties with lawful crypto businesses.

A Win for the Crypto Industry

David Sacks, prominent investor and crypto advocate, praised the decision as a “big win for crypto.” The industry has long struggled with inconsistent access to banking services, largely due to regulatory uncertainty and perceived reputational risks.

With the FDIC stepping back from this ambiguous standard, banks may now feel more secure working with crypto firms, opening the door to greater financial inclusion and innovation in the sector.

This policy shift could also restore more neutrality in regulatory oversight, ensuring that decisions are based on objective risk factors rather than subjective reputational concerns.

Looking Ahead

While this is a step in the right direction, the crypto industry will continue to watch how federal regulators handle future guidance and enforcement. Removing reputational risk is a positive sign, but sustained transparency and fair access to banking will be key for long-term growth.