U.S. Banking Regulators Exclude Reputation Risk, Reviving Debanking Discussions

U.S. banking regulators have institutionalized a supervisory principle focused on financial risks such as capital, liquidity, and credit, excluding reputation risk from their oversight criteria. This has led to expectations in the cryptocurrency industry that the so-called debanking issue, where access to bank accounts is restricted, may ease, although interpretations vary on whether this constitutes a weakening of oversight.

The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) announced a final rule on April 7, 2026, excluding reputation risk from supervisory programs. This rule aims to prevent banks from being pressured to close accounts or limit services based on customers' political or religious views, constitutionally protected speech, or legitimate business activities, and it took effect on June 9.

The Federal Reserve has also moved in the same direction. In a proposed rule on February 23, 2026, the Fed stated it would align supervisory judgments with significant financial risks. Subsequently, on June 2, the Fed, OCC, and FDIC removed references to reputation risk in 15 joint guidelines.

The three agencies explained that this measure aims to clarify supervisory decisions and prevent financial services access from being restricted due to political or religious beliefs or legitimate businesses. The OCC has also indicated that it will not examine banks based on reputation risk criteria after March 20, 2025.

Reputation risk refers to the potential for a bank's image or trust to be damaged when engaging with specific customers, industries, or transactions. While it has been treated as a supplementary factor in assessing safety and soundness in bank supervision, regulators have deemed this criterion subjective and difficult to measure.

This change is more about the reallocation of supervisory criteria than regulatory relaxation. The OCC and FDIC stated in the final rule that credit risk, market risk, operational risk, and liquidity risk are more specific criteria for assessing a bank's safety and soundness. They maintain that existing prohibitions against discrimination, predatory lending, and fraud prevention regulations will remain in place even with the exclusion of reputation risk.

The OCC executed 25 formal enforcement actions against banks in the 2025 fiscal year, more than half of which were related to supervisory systems, strategies, or capital planning and liquidity risk management. This figure indicates that the supervisory focus remains on the financial soundness and risk management systems of banks.

The trend of decreasing public enforcement actions also plays a role. Brookings analyzed public enforcement actions from the three federal banking regulators from 2015 to 2025 and found that formal enforcement has generally decreased. Comparing before and after the COVID-19 pandemic, the Fed's formal enforcement actions decreased by less than 50%, while the FDIC saw about a 25% reduction.

There are also analyses suggesting that, excluding a spike in 2024, the OCC has returned to a downward trajectory. However, during the same period, the number of banks in the U.S. decreased from 6,182 to 4,336, a drop of over 30%, making it difficult to assess supervisory intensity based solely on simple counts. Even if public enforcement actions decrease, how informal supervision or corrective demands are managed requires separate verification.

A key point of interest for the cryptocurrency industry is bank account accessibility. Coinbase ($COIN) expressed support for clear and harmonized prohibitions against politicized debanking in its comments on the Fed's proposed rule on April 27, 2026. Previously, on December 29, 2025, in response to a joint proposal from the OCC and FDIC, it stated that reputation risk should be removed from bank supervision and licensing, and that quantifiable financial and legal risk-based criteria should be established.

The debanking controversy is intertwined with the difficulty cryptocurrency companies face in securing stable access to traditional bank accounts or payment services. Banks typically screen high-risk customer groups based on anti-money laundering, fraud risk, sanctions compliance, and consumer protection burdens. With reputation risk removed from supervisory criteria, companies claiming they were restricted from services solely for being legitimate businesses gain a logical basis for their claims.

The banking sector has generally welcomed the change. The Bank Policy Institute (BPI) stated in a comment on April 27, 2026, that the removal of reputation risk is a necessary and sensible change. The BPI argued that supervision should focus on substantial financial risks rather than political leanings.

However, there are counterarguments. Comments from the Federal Register expressed concerns that eliminating reputation risk oversight could weaken the detection of illegal or risky behaviors and degrade customer service. The OCC and FDIC countered in the final rule that discontinuing reputation risk oversight would allocate more resources to monitoring illegal and abusive practices.

For Korean readers, this issue serves as a regulatory indicator of the banking environment for U.S. digital asset companies. As reported, applications for banking licenses related to digital asset custody and stablecoins are ongoing, indicating that exchanges and stablecoin operators in the U.S. continue to seek to enter the banking supervisory framework.

However, the removal of reputation risk does not guarantee access to banks for cryptocurrency companies. Oversight related to anti-money laundering, fraud prevention, consumer protection, and safety and soundness remains in place. After the final rule takes effect on June 9, 2026, how banks reflect the new criteria in actual account reviews and risk management will be the next point of verification.