Federal Reserve Proposes Rule to Combat Crypto Debanking
- The Federal Reserve is seeking comments on a proposal to prevent banks from severing ties with lawful customers, including crypto companies, based on their activities.
- Vice Chair for Supervision Michelle W. Bowman highlighted troubling instances of debanking due to customers’ political views or business involvement.
- JPMorgan Chase & Co. admitted to closing over 50 accounts affiliated with President Trump in February following the January Capitol attack.
- The Fed’s proposal aims to codify the removal of reputation risk from its supervisory framework and will accept comments for a period of 60 days from February 23.
- The Office of the Comptroller of the Currency had already moved to eliminate reputational factors from supervision last year.
This proposed rule reflects ongoing concerns about discrimination against financial institutions based on lawful business activities, particularly those related to crypto. The Fed’s initiative could significantly impact how banks interact with crypto-native firms seeking access to traditional banking services.
With JPMorgan’s acknowledgment of account closures and the Fed’s new proposal, the landscape for crypto companies may shift as regulatory frameworks evolve.(Source)
