Why the Fed's banking rule changes benefit cryptocurrency businesses in the United States

The U.S. Fed has officially removed the guidance on "reputational risk" in monitoring banks, an important tool that was previously used to limit the activities of cryptocurrency companies. This surprising breakout could facilitate deeper integration between traditional finance (TradFi) and Web3.

It should be clarified that the Fed does not recognize this as a victory for the cryptocurrency industry, and their brief statement does not directly mention this sector. However, this regulatory change has the potential to encourage a positive shift in the attitudes of financial institutions.

The era of cryptocurrency suspension ends

The banking sector and the cryptocurrency industry have gone through a complex history in recent years, but not entirely due to the fault of the banks.

Federal regulators have launched a campaign to suspend cryptocurrency, significantly reducing collaboration between the two sectors. However, this damage is gradually being restored, and the industry has achieved an important victory today:

According to the latest press release from the Fed, reputational risk will "no longer be a factor" in the supervision of banks. To be clear, this document does not directly mention cryptocurrency or the suspension of cryptocurrency in any form. Nevertheless, it is easy to see that this is a significant regulatory success for the cryptocurrency industry for several reasons.

First of all, the Fed is the last major organization to maintain this tool. The FDIC eliminated a similar regulation in March, which David Sacks called a "big win" in the fight against the suspension of cryptocurrencies.

In fact, many managers in the past have implemented regulations regarding reputational risk, allowing for large-scale harassment campaigns targeting leaders in the cryptocurrency industry. This period has officially come to an end.

Moreover, this move marks a shift in banking regulation from arbitrary enforcement, based on value, to a transparent monitoring model, based on evidence.

This could drive the adoption of cryptocurrencies within financial institutions, as banks may feel more confident when interacting with customers holding digital assets under clearer oversight expectations.

In other words, this regulatory change will encourage both cryptocurrency and TradFi to move further away from the legacy of the cryptocurrency suspension. While this does not guarantee new collaboration, it will allow banks to assess potential cryptocurrency customers more objectively.

By removing a legal barrier, the Fed is enabling banks to confidently engage with Web3. Many large investment banks have shown interest in this sector, so this momentum could rapidly accelerate current trends.

The Choke Point 2.0 campaign and the cryptocurrency suspension era have left many scars on this industry, but a new day has come. There are now many opportunities to build a new ecosystem with friendlier regulations.

Mr. Giáo