Banks and Crypto Assets: Regulatory Easing May Open New Horizons

Recently, a notable change has emerged in the field of financial regulation in the United States. The Federal Deposit Insurance Corporation (FDIC) may follow the lead of the Office of the Comptroller of the Currency (OCC) and no longer consider "reputational risk" as a factor in bank supervision. This potential policy adjustment is seen by industry insiders as a significant breakthrough for the Crypto Assets industry.

Reputation Risk: The Intangible Barriers Between Encryption and Banks

For a long time, "reputational risk" has been a major barrier for American banks in collaborating with encryption companies. This concept refers to the risk that banks may damage their reputation due to certain business activities or behaviors. Regulators have defined it as "negative publicity regarding the institution's business conduct (whether true or false), which may lead to customer loss, lawsuits, or revenue decline." This vague and subjective standard has become a tool for regulators to intervene in banking operations, particularly in the field of Crypto Assets.

Many banks are concerned that collaborating with crypto companies will be viewed by regulators as "high risk", and therefore refuse to provide services to them, not even allowing basic account openings. This phenomenon has led some well-known crypto companies to seek banking services overseas, a situation referred to in the industry as "Operation Chokepoint 2.0", alluding to the indirect suppression of the crypto industry’s development through financial regulation.

Policy Shift: New Opportunities in the Crypto Assets Industry

With the FDIC possibly eliminating the practice of considering "reputational risk" as a banking regulatory factor, the Crypto Assets industry seems to see new hope. This change means that banks may collaborate more freely with encryption companies, no longer troubled by regulatory pressures. For encryption companies, this could mean easier access to banking services, allowing them to focus more on business development.

In addition, the Financial Institutions Risk Management Act (FIRM Act) proposed by U.S. Senator Tim Scott aims to further limit regulatory agencies from using reputational risk to constrain banks. These measures collectively indicate that the U.S. government may be adjusting its regulatory stance on the Crypto Assets industry, shifting from strict control to providing more space.

Industry Response: Rational Thinking Amid Optimism

The crypto industry generally welcomes this potential change. The CEO of a certain asset management company stated that this is good news for the industry, as it will make cooperation with banks easier and may reduce operational costs.

However, there are also voices reminding that the willingness of banks to cooperate with crypto companies depends not only on regulatory policies but also on factors such as compliance and anti-money laundering risk control capabilities. Many crypto assets companies still have shortcomings in these areas, which may continue to affect the willingness of banks to cooperate.

Outlook: An Important Step Towards Maturity

The FDIC may eliminate "reputational risk" as a regulatory factor, marking an important milestone for the crypto industry. It not only removes a major barrier for banks and crypto companies to collaborate, but also indicates a potential shift in the United States' attitude towards Crypto Assets.

However, for the crypto industry to truly integrate into the mainstream financial system, simply relying on policy relaxation is not enough. It also needs to continuously progress in areas such as technological innovation, compliance management, and public trust. Although there are still challenges ahead, this change undoubtedly opens up new possibilities for the Crypto Assets industry and may become an important starting point for its move towards mainstream finance.