Fed seeks to reduce risks for banks working with cryptocurrencies
The Federal Reserve (Fed) in the US has proposed a new rule that would reduce the so-called 'reputational risks' for banks when interacting with cryptocurrency companies. This will significantly facilitate the ability of financial institutions to serve players in the crypto industry, whom they have often been forced to disconnect from due to pressure from regulators.
The current Fed requirements mandate that banks carefully assess the 'reputational risks' when working with certain companies or industries. This often led to financial institutions, under pressure from regulators, refusing to serve the crypto business, fearing negative consequences for their own reputation.
The new initiative aims to change this situation. According to the proposal, reputational risks will no longer be taken into account when assessing the possibility of banks cooperating with crypto companies. In addition, supervisory authorities will be prohibited from demanding that banks terminate such business relationships.
Experts believe that this innovation will help overcome the so-called 'debanking effect' in the crypto industry. Many crypto companies, especially young and small ones, have faced bank refusals to service them due to high reputational risks. This has seriously hampered their activities. Now, financial institutions will be able to work more calmly with this sector.
The Fed believes that such measures are necessary for the further development of the crypto industry in the US and its closer integration into the traditional financial system. The agency intends to continue working in this direction.