The U.S. Office of the Comptroller of the Currency has ended reputation risk checks due to strong opposition from the crypto industry towards "de-banking"

The US Office of the Comptroller of the Currency (OCC) has stated that it has ceased conducting reputation risk checks on national banks and other financial institutions, following criticism from the crypto industry for being excluded from the financial system. In a statement released on Thursday, Acting Comptroller Rodney E. Hood said that the agency's inspection process has always focused on "appropriate risk management processes," rather than judging certain activities.

Hood said: "The OCC has never used reputation risk as a catch-all reason for regulatory action. Focusing future inspection activities on more transparent areas of risk can enhance public confidence in the OCC's supervisory process and clearly indicate that the OCC does not, and will not make business decisions for banks."

The OCC also stated that it would remove references to reputation risks from its manuals and guidance notes, although it noted this would not change its expectations regarding how banks handle risks. The OCC recently clarified that crypto activities are allowed within federal banking systems, marking a significant shift in its previous stance.

Legislators and the crypto industry have long believed digital asset companies face unique challenges when setting up and maintaining bank accounts in America. Last week, Senate Banking Committee voted to advance a bill removing reputation risk as a way federal regulators oversee financial institutions. The vote was split along party lines with no Democrats supporting it.