OCC removes reputational risk from bank exams

The Office of the Comptroller of the Currency (OCC) has announced that it will no longer examine banks for reputational risk, a move welcomed by the cryptocurrency industry.

This decision follows criticism that regulators used reputational risk as a pretext to pressure banks into rejecting digital asset clients, leading to instances of debanking.

Acting Comptroller Rodney Hood emphasised that the OCC's focus is on ensuring banks manage risks appropriately, not on judging public opinion.

The agency will remove references to reputational risk from its guidance materials, aligning with a broader effort to clarify and ease regulatory hurdles for banks engaging in cryptocurrency activities.

This shift is part of a broader regulatory evolution under the Trump administration, which has been working to create a more favorable environment for crypto businesses.

The OCC recently issued guidance allowing banks to engage in certain cryptocurrency activities without needing prior approval, marking a significant change from previous restrictions.

The removal of reputational risk from exams reflects a growing recognition of the need for clearer and more supportive regulatory frameworks for digital assets.

As the OCC moves to streamline compliance processes, it aims to foster innovation while maintaining safety and soundness in banking operations.

Federal Reserve Chair Jerome Powell has also committed to reducing similar scrutiny, indicating a coordinated effort among U.S. financial regulators to address industry concerns and promote a more inclusive banking environment for crypto-related businesses.