The Blockchain Association is urging U.S. banking authorities to strip “reputational risk” from supervisory guidance, arguing that the vague standard has discouraged banks from serving lawful crypto firms. Industry advocates say the change could expand access to basic banking services, improve market liquidity, and strengthen the resilience of digital asset markets.
What is reputational risk in bank supervision?
Reputational risk generally refers to potential harm to a bank’s standing with customers, investors, and the public. In supervisory practice, regulators have treated it as one of several risk categories banks must manage, alongside credit, market, operational, and compliance risks.
Critics contend the concept is inherently subjective and can be used to pressure banks to avoid entire lawful industries deemed controversial, rather than assessing customers on their individual merits and risk controls. Similar concerns have surfaced in past debates over access to financial services for other sectors.
The Blockchain Association’s position
The industry group argues that removing reputational risk from bank supervision would encourage a clearer, risk-based approach grounded in established legal and compliance requirements. That would mean evaluating crypto clients based on factors such as anti-money laundering controls, capital adequacy, liquidity, and operational risk—rather than perceived optics.
According to the Association, clearer supervisory expectations would reduce uncertainty for banks weighing crypto relationships and help prevent the broad “de-risking” that has limited access to operating accounts, payments, and custody services for compliant digital asset companies.
Potential market impact
Expanded banking access for crypto firms could:
- Improve on- and off-ramp reliability for fiat settlement.
- Support market making and payment flows, potentially enhancing liquidity.
- Lower operational frictions for exchanges, custodians, and fintechs that serve retail and institutional clients.
Industry participants say these effects could bolster market stability and competition, while bringing more crypto activity within the perimeter of regulated financial services.
Regulatory context and what to watch
U.S. banking agencies have repeatedly warned institutions about risks associated with digital assets, prompting many banks to curtail or reevaluate crypto-related services—especially following major industry failures in 2022 and 2023. Lawmakers and industry groups have criticized what they view as “de-banking” of lawful crypto businesses and have called for clearer, technology-neutral supervisory standards.
Any formal change would likely require updated guidance or rulemaking from federal banking regulators. Stakeholders will be watching for public consultations, interagency statements, or legislative efforts that address how banks may engage with digital asset firms under a risk-based framework.