The U.S. Federal Reserve announced on February 23, 2026, that it is seeking public feedback on a proposal to make it law that supervisors cannot pressure banks to close client accounts based on "reputation risk." The central bank has set a 60-day deadline for comments on the rule, which formalizes guidance first issued in June 2025. The change mandates that financial institutions can only make client decisions based on measurable financial risk management, not on political views, religious beliefs, or association with lawful but disfavored industries like digital assets.
Discrimination by financial institutions on these bases is unlawful and does not have a role in the Federal Reserve's supervisory framework.
— Michelle Bowman, Vice Chair for Supervision.
Industry Hails End of 'Operation Chokepoint 2.0'
Crypto industry advocates and supportive lawmakers praised the proposal as a definitive step to dismantle what they termed "Operation Chokepoint 2.0." This term describes a perceived coordinated effort by U.S. regulators to cut crypto companies off from the traditional banking system. The practice has been a major operational hurdle and source of instability for digital asset firms operating in the United States.
Senator Cynthia Lummis lauded the Fed's action, stating it would help establish America as the "digital asset capital of the world" by removing a significant regulatory obstacle. Alex Thorn, head of firmwide research at Galaxy Digital, echoed this sentiment, calling it a continuation of the "chokepoint 2.0 rollback." By codifying the policy, the Fed aims to create a more predictable and fair banking environment, which could encourage greater institutional participation and investment in the crypto sector.
