The US Federal Deposit Insurance Corporation, an independent federal government agency, has been reported moving to stop using the “risk reputation” category as a way to handle banks.
According to In a letter sent by the chairman of the acting agency Travis Hill, Rep. Dan Meuser on March 24, banking regulators should not use a “reputation risk” to check companies.
“While a bank’s reputation is important to critical, most of the activities that can threaten a bank’s reputation do this through traditional risk channels (for example, credit risk, market risk, etc.) that administrators are focused,” says the letter, first reported by politico.
According to the document, the FDIC has completed a “review of all references to reputation” in policy regulations and documents and has a “plan to eliminate this concept from our regulatory approach.”
https://www.youtube.com/watch?v=IMVHLPBircu
Reputational Risk and Debanking
The Federal Reserve specified The risk of reputation as “the potential negative publicity about the business skills of an institution, whether true or not, will cause a fall to the customer’s base, expensive litigation, or income reductions.”
FIDC’s letter specifically mentioned digital possessions, Hill noted that the agency is usually “closed for business” for institutions interested in blockchain or distributed Ledger technology. Now, like each document, the FDIC is working in a new direction for the Digital Asset policy aimed at providing banks a way to engage in digital possessions.
The letter was sent in response to a February Communication from Meuser and other lawmakers with recommendations for digital asset policies and ways to prevent dedication.
Industries considered “risk” in banks often face important challenges in establishing or maintaining banking relationships. The crypto industry faces such challenges during the time being known as Operation Chokepoint 2.0.
Unofficial operation led to more than 30 technologies and cryptocurrency companies that banking services have been denied In the US after the collapse of the Banks friendly crypto earlier in 2023.
Related: FDIC is resistant to transparency in Operation Chokepoint 2.0 – Coinbase CLO
