FDIC Set to Discuss Rule That May Shape Banks’ Crypto Relationships

The Federal Deposit Insurance Corporation (FDIC) is preparing to discuss proposed rules that may significantly affect the relationship between banks and cryptocurrency firms, particularly in light of recent allegations of debanking practices. During a recent board meeting, the FDIC will consider a notice of proposed rulemaking aimed at prohibiting regulators from using reputation risk as a justification for preventing banks from engaging with crypto activities. This comes after criticism from acting FDIC chair Travis Hill regarding the use of reputation risk by regulators, which has led to some banks allegedly denying services to clients involved in the crypto sector. This issue has been politically charged, especially since former President Donald Trump highlighted it in an executive order aimed at eliminating what he termed 'politicized or unlawful debanking.' The ongoing discussions will likely impact how US banking regulators approach cryptocurrency firms in the future, making this a critical moment for the industry.

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