FRED quietly removes the reputational risk rule for quietly moving banks away from crypto. Industry officials say this will change everything

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The Federal Reserve has made a move that allows a quiet restructuring of Crypto’s relationship with traditional banking. FRB announcement June 23rd, it is to reduce the risk of reputation from the banking exam program. This is the change that crypto advocates have been driving for years and ultimately, allowing floodgates to be opened for mainstream crypto banking services.

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The Fed’s announcement sounds like a lack of regulations, but it’s smashed at the heart of Crypto’s biggest problem: bank access. For years, crypto companies have struggled to maintain basic banking relationships, not because they pose financial risks, but because they feared regulators’ blows on the industry’s controversial reputation.

“Reputation risk” has given regulators a catch-all tool to put a strain on banks from crypto clients. Even legally compliant crypto exchanges, custody providers, and blockchain startups were often separated from banking services simply because regulators viewed the industry as being too risky from a PR perspective.

Now, as reputational risk has been officially removed from the exam, banks are evaluated on purely measurable financial indicators.

The crypto industry has long argued that regulatory hostility, not real risk, is keeping the banks’ length. Major crypto companies like Coinbase (NASDAQ:coin), Kraken, and Circle (nyse:CRCL) repeatedly emphasized how difficult it is to secure and maintain banking relationships despite operating as a regulated entity.

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This change could fundamentally change that dynamic. Here’s what happens:

More bank partners: Crypto companies may ultimately gain access to mainstream banking services for payroll, business operations and customer fund management. This could reduce costs and improve operational efficiency across the sector.

Stablecoin infrastructure: The move could accelerate the silly, ridiculous adoption of dollar support, as banks are willing to retain reserves for compliant stable issuers without fear of regulatory pressure.

Institutional adoption: Traditional banks may ultimately feel comfortable providing crypto custody, trading or investment services to wealthy clients and institutional clients.

Payment Rail: It was further integrated between crypto payment systems and traditional banking infrastructure, allowing money to be easier between crypto and traditional finance.

If banks begin to handle crypto like other legal industries, the impact is far beyond business operations. Increased bank access could drive significant changes in crypto assessment and adoption.

Low volatility: Improved banking relationships can reduce operational risks that contribute to cryptocurrency price fluctuations, leading to a more stable evaluation.

Institutional influx: When banks become easier to access, facilities’ funding flows could accelerate the flow to the crypto market, similar to what we saw with Bitcoin ETF approval.

Defi Integration: Traditional banks can be more willing to explore decentralized financial protocols, potentially closing the gap between Tradfi and Defi.

It is important to understand what this policy change means. Crypto companies must comply with all existing financial regulations, including anti-money laundering rules, customer requirements, and securities laws. The Fed emphasized that banks must maintain “strong risk management” and legal compliance.

Banks are also free to choose their clients based on actual business risks. They cannot be punished by regulators for serving legal crypto businesses based on the reputation of the industry.

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This move comes as the crypto industry prepares for potentially friendly regulatory treatments under the new administration. In combination with Bitcoin and Ethereum ETF approval, MicroStrategy (NASDAQ:MSTR) and Tesla (Nasdaq:TSLA), and with increased clarity regarding crypto regulations, the Fed’s decision removes another important barrier to mainstream adoption.

The timing is no coincidence. With the mature crypto market and growing institutional interest, the argument of dealing with legally compliant crypto businesses that differ from other industries is hard to justify.

For crypto investors, this regulation change could be a game changer, but the impact could unfold in months rather than days. Key indicators to monitor:

• Announcements from major banks on new crypto services

• As bank access improves, operating costs for crypto companies decrease

• As traditional finances become more comfortable with crypto, increasing institutional adoption

• As operational risks decrease, more stable crypto prices

• Extended integration between crypto and traditional financial systems

Bitcoin hits new highs grabs headlines, but such regulatory changes often have a lasting impact on the long-term trajectory of crypto. For an industry that has spent years fighting to access basic banks, the Fed’s quiet policy shift could ultimately be a breakthrough that fully introduces Crypto into the mainstream financial system.

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This article FRED quietly removes the reputational risk rule for quietly moving banks away from crypto. Industry officials say this will change everything It originally appeared Benzinga.com