FDIC to Abandon 'Reputational Risk' Scrutiny, Signaling Shift in Crypto Regulation

The U.S. Federal Deposit Insurance Corporation (FDIC) is moving away from using 'reputational risk' as a basis for supervising banks, according to a letter dated March 24 from acting chairman Travis Hill to Rep. Dan Meuser. This decision, first reported by Politico, aims to remove the concept from the FDIC's regulatory approach. The FDIC's review includes digital assets, signaling a potential shift in policy towards providing banks with avenues to engage with blockchain and distributed ledger technology. This move follows concerns raised by lawmakers regarding debanking and the need for clearer digital asset rules, particularly after the challenges faced by crypto firms in 2023.