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- A new bill seeks to stop regulators from using reputational risk to influence banks and limit access for crypto firms.
- Crypto businesses say they face unfair banking restrictions and want clear rules to ensure fair access to financial services.
- Lawmakers debate financial oversight as some argue for stricter rules while others push for open banking for all industries.
Senator Tim Scott has introduced a bill to prevent financial regulators from using reputational risk to influence banking decisions. The Financial Integrity and Regulation Management Act aims to stop regulators from pressuring banks to cut ties with legally operating businesses. This is based on public perception rather than financial stability. The bill was backed by 11 Republican senators and it addresses concerns that regulators have unfairly targeted digital asset firms and other industries.
Crypto companies have faced difficulties accessing banking services, with some firms struggling to maintain accounts. The federal agencies use reputational risk as a pretext to push political agenda against certain businesses. Industry groups like the American Bankers Association and the Blockchain Association, have voiced their support for the bill and are advocating for fair banking access.
Crypto Firms Demand Fair Financial Access
The crypto industry has long raised concerns about being systematically excluded from banking relationships. Many digital asset businesses claim they face obstacles despite complying with financial regulations. They argue that without proper banking services, crypto markets may shift to less transparent and unregulated spaces, increasing risks for investors and the broader financial system.
Senator Cynthia Lummis has called for a regulatory approach that encourages innovation and also ensures market stability. Preventing regulators from citing reputational risk will create an even playing field for all industries. Due to the changing political and regulatory landscapes, businesses fear financial exclusion since there are no clear guidelines.
Regulatory Debate Over Financial Oversight
Opponents of the bill say that financial regulators need flexibility to address emerging threats. Some lawmakers refer to the past fraud cases and market volatility as justification for maintaining stricter oversight. High-profile bankruptcies and security breaches in the crypto sector have fueled calls for stronger consumer protections.
Federal Reserve Chair Jerome Powell recently acknowledged concerns over debanking and signaled a willingness to revisit the issue. Meanwhile, major banks remain cautious, balancing regulatory expectations with industry demands. The outcome of this legislative effort could significantly impact how financial institutions assess risk and serve digital asset firms in the future.
