Blockchain Association Backs Fed Plan to Codify Removal of Reputation Risk

US crypto lobby group Blockchain Association has thrown its support behind the US Federal Reserve's proposal to codify the removal of "reputation risk" from its supervision of banks, which has been used in the past to debank crypto companies. In a letter sent Monday in response to the Fed's request for comment, Ashok Pinto, the group's executive vice president of legal and government relations, said reputation risk, which was removed as a component of examination programs in June 2025, should be made a formal rule. "The Blockchain Association strongly encourages the Board to move expeditiously to finalize and codify the removal of reputation risk from its supervisory framework," Pinto wrote. "Regulation is meant to uphold the integrity of our financial system, not to pick winners and losers based on the political winds of the day. Regulated entities are entitled to objective, consistent standards. Reputation risk provides neither," he added. Reputation risk has been used in the past to justify debanking crypto companies and cutting off their access to banking rails, as part of what has been dubbed "Operation Chokepoint 2.0." Reputation risk is only as neutral as the administration wielding it The Trump administration has walked back many of the policies that led to crypto debanking, but Pinto argued that a concrete set of rules removing reputation risk from supervisory programs is needed because another, less crypto-friendly US government could come to power in the future. US think tank Cato Institute found in January that most debanking cases in the US resulted from government pressure rather than individual banks' policies. "Reputation risk is only as neutral as the administration wielding it. The same mechanism used against the digital asset industry under the Biden Administration could be turned against any other lawful business sector under any future administration," Pinto wrote. "Codifying its removal is a durable, administration-neutral protection for any American business operating lawfully within our financial system." Final rule should be aligned with other regulators At the same time, Pinto said the Fed board should align its final rule with parallel rulemakings finalized by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). The OCC and FDIC issued a final rule on April 7 to codify the removal of reputation risk from their supervisory programs. "A standard harmonized across federal departments and agencies would provide regulated entities with the clarity and predictability they are owed," Pinto wrote. "Ensuring that supervision is grounded in objective, consistent, and measurable standards is essential to preserving the safety and soundness of the financial system and maintaining confidence in the impartiality of the regulatory process."