The US Federal Reserve has proposed a sweeping rule that would prohibit banks from citing “reputational risk” as a justification to sever ties with legitimate businesses—including blockchain, cryptocurrency, and other digital asset firms. Announced on February 23, 2026, the proposal aims to prevent banks from selectively closing accounts based on subjective or politically motivated criteria, and instead prioritizes fair access to financial services for all lawful industries.
Pursuing Objectivity in Bank Supervision
Under the proposed regulation, banks would be required to base customer relationship decisions on clear financial risk assessments rather than personal or institutional biases. By removing factors such as industry preference or perceived social reputation from consideration, the Federal Reserve seeks to end discriminatory practices that have long affected sectors operating within the law. The ultimate goal is to ensure banks serve all legal industries impartially, shielding them from arbitrary exclusion.
Structural Reform and Federal Statements
Michelle Bowman, Vice Chair for Supervision at the Federal Reserve, highlighted recent reports of regulators pressuring banks to cut services to clients over their religious beliefs, political positions, or lawful business activities. This new rule, she noted, would decisively prevent examiners from interfering with a bank’s choice to work with any client engaged in legal activities. The proposal follows up on earlier administrative changes that curbed the use of reputational risk as a tool for enforcement.
Bowman emphasized the importance of neutrality in banking, reiterating that fair treatment of customers lawfully operating in their sectors is essential for both industry stability and continued innovation.
Impacts on Crypto Sector and Industry Response
The initiative has drawn enthusiastic support from many within the cryptocurrency and blockchain space, who have long expressed concerns over unfair treatment by traditional financial institutions. Critics have argued that discriminatory regulatory practices at the federal level have hindered the sector’s growth; the new proposal hopes to dispel these frustrations and ensure a more inclusive playing field.
US Senator Cynthia Lummis took to social media to commend the Fed’s decision to step away from an “arbiter and jury” role toward crypto companies, voicing her support for the permanent removal of “reputational risk” from agency policy.
Senator Cynthia Lummis pointed out that ending both judgmental oversight and reputational risk-based practices targeting digital asset firms is a significant stride toward establishing the US as a leading hub for digital assets.
Alex Thorn of Galaxy Digital, a major voice in the sector, referred to the move as pivotal in pushing back against what has been dubbed “Chokepoint 2.0”—concerted efforts to limit crypto firms’ access to the traditional financial system.
In another related development, the US Commodity Futures Trading Commission announced the formation of a 35-member Innovation Advisory Committee. With blockchain and artificial intelligence on the agenda, the panel is tasked with steering regulatory responses to emerging technologies, supporting the evolution of technology-driven finance while safeguarding market integrity.
