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Excellent Crypto News Coming from the US Federal Reserve
- The US Federal Reserve Board has decided to eliminate 'reputational risk' as a supervisory tool for banks, potentially enabling easier banking access for crypto companies.
- This move aligns with efforts to support crypto businesses that have faced challenges due to banks using reputational risk to avoid crypto-related activities.
- The US House Committee on Financial Services praised the decision, noting its alignment with a bill aimed at curbing bureaucratic overreach.
- The Federal Reserve Board is reviewing and removing references to reputational risk from its supervisory materials, following other American bank regulators in dropping this examination standard.
- Reputational risk had been a significant factor in bank decisions to avoid dealing with clients associated with cryptocurrencies, impacting the industry.
- Following the 2023 crypto bank collapses, more than 30 crypto and tech companies were denied US banking services, leading to widespread banking access issues.
- The elimination of reputational risk is seen as a positive development for banks looking to engage with crypto entities without fear of repercussions.
- Representative Dan Meuser and other lawmakers had previously called for clearer digital asset rules and measures to prevent debanking.
- Debanking, the practice of banks closing or restricting accounts for perceived high-risk customers, remains a global issue affecting industries like crypto.
- Debanking is particularly problematic in third-world countries where citizens often struggle to meet banks' Know Your Customer (KYC) requirements.
- Despite the creation of crypto to enable peer-to-peer transactions and bypass traditional banking, banks continue to wield significant control over financial transactions.
- The move by the Federal Reserve Board is expected to have a positive impact on the crypto industry by facilitating improved banking access.
- The issue of debanking persists globally, affecting various industries and individuals dealing with perceived financial, legal, or reputational risks.
- The news demonstrates a step towards greater cooperation between traditional financial institutions and the crypto sector, potentially fostering innovation and growth.
- The development highlights ongoing efforts to address challenges faced by crypto companies in accessing banking services and engaging with the traditional financial system.
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