US Crypto Emperor: "Removing Reputational Risk from Bank Supervision Guidelines... Good for Virtual Assets"

Uk Jin

Summary

The Federal Deposit Insurance Corporation (FDIC) announced the removal of the reputational risk factor, which is seen as positive news for the virtual asset industry.
David Sachs stated that this measure could reduce potential risk factors such as customer attrition, facing lawsuits, and revenue reduction for institutions.
The ambiguous standard of reputational risk previously led virtual asset businesses to experience debanking.

The United States Federal Deposit Insurance Corporation (FDIC) has announced plans to remove the 'reputational risk' factor from bank supervision guidelines, which is seen as positive news for the virtual asset (cryptocurrency) industry.

On the 25th (local time), US Crypto Czar David Sachs announced on X (formerly Twitter) that "the FDIC is removing the reputational risk factor from the bank supervision process following the opinion of the Office of the Comptroller of the Currency (OCC)." Here, the reputational risk factor for banks refers to the stage of assessing the risk that could negatively impact the image or reputation of a company or its stakeholders.

Regarding this, David Sachs explained, "Assessing reputational risk is theoretically good," but "it could potentially lead to risks such as customer attrition, facing lawsuits, and revenue reduction for institutions."

In particular, David Sachs cited Operation Choke Point 2.0, which had swept over the virtual asset industry, as an example. He said, "The ambiguous and subjective standard of reputational risk enabled Operation Choke Point 2.0, causing legitimate virtual asset businesses to suffer the humiliation of debanking."