#Bitcoin Reserve Bill  Fed’s Banking Rule Change Is a Big Win for U.S. Crypto Businesses.

The Federal Reserve has removed “reputational risk” guidance that was used to discourage crypto banking relationships.

The change follows a similar move by the FDIC in March. It signals a broader shift toward shutting down crypto banking.

By removing the rule, the Fed is paving the way for more objective assessments of crypto customers and possible collaboration with TradFi.

The Federal Reserve has lifted its “reputational risk” guidance for overseeing banks. This was a key tool in driving crypto firms out of the banking system. This surprising development could spur integration with traditional finance and Web3.

To be clear, the Fed didn’t frame this as a victory for crypto, and it didn’t mention the sector at all in its brief statement. Still, this rule change could spur a broader shift in institutional attitudes.

The End of the Cryptocurrency Debanking Era

The banking sector and the crypto industry have had a troubled history over the past few years, but it’s not necessarily the banks’ fault.

Federal regulators have waged a debanking campaign against the crypto industry, largely discouraging collaboration between the sectors. However, that damage is being reversed, and the industry has scored a significant victory today.

According to the Fed’s latest press release, reputational risk will no longer be a component of bank oversight. To be clear, the document does not directly address crypto or debanking.

However, it’s easy to read between the lines and call this a major regulatory success for crypto for a number of reasons.

First, the Federal Reserve was the last major institution to keep this tool open. The FDIC removed a similar rule in March, which David Sacks called a “major victory” over crypto debanking.

Indeed, many regulators previously kept reputational risk rules in place, enabling major harassment campaigns against crypto leaders. That era is officially over.

Additionally, this move moves banking regulation away from discretionary, value-driven practices and toward transparent, evidence-based oversight.

This could help institutional crypto adoption as banks feel more confident engaging with digital asset clients under clearer oversight expectations.

In other words, this rule change will encourage crypto and traditional finance to break away from the legacy of debanking. It won’t guarantee new partnerships, but it will allow banks to more objectively evaluate potential crypto customers.

By removing a regulatory barrier, the Fed is allowing banks to safely engage with Web3.

Many major investment banks are already interested in the sector, so this incentive could accelerate existing trends.