On 27th August, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) jointly moved to finalize rules that define the term 'unsafe or unsound practices' in bank supervision. According to reports from AMBCrypto, Head of the OCC Jonathan V. Gould stated that the move will help bank leaders avoid distractions and focus on 'material financial risks'. Gould emphasized that bank supervision should focus on substantive violations of law over concerns tied to policies, process, documentation, and other related enforcement standards. The agencies emphasized that the rule applies to the institutions they supervise and the agencies' examination and supervisory processes, with the rule following a proposal issued by the OCC and FDIC in October 2025, containing modifications from the original proposal. The final rule defines an unsafe or unsound practice as conduct that is contrary to generally accepted standards of prudent operation and that has caused, or could reasonably cause, material financial harm to an institution or pose a significant risk to the Deposit Insurance Fund. The framework is tied to Section 8 of the Federal Deposit Insurance Act and establishes standards for supervisory findings, including Matters Requiring Attention (MRAs), directing examiners to consider the specific risk profile and circumstances of each institution.
The final rules will effectively take effect 60 days after the guidelines appear in the Federal Register. As reported by AMBCrypto, former FOX Business reporter Eleanor Terrett characterized the move as pro-crypto, marking another significant step toward unwinding 'Operation Choke Point 2.0'. The term 'unsafe or unsound practices' has remained undefined for years and was left to the discretion of bank examiners during the Biden-era administration. During 2022, banks were warned not to engage with firms or persons dealing with crypto assets or stablecoins, resulting in crypto firms, related fintechs, founders and clients being debanked. While the rule does not specifically address cryptocurrency, its emphasis on material financial risks has attracted attention from the digital-asset industry because of the continuing debate over whether banks have restricted services to crypto companies for reasons unrelated to financial risk. The connection to crypto is primarily contextual rather than explicit in the rule itself, as the agencies did not use terminology like 'Operation Chokepoint 2.0' and did not make findings that regulators previously directed banks to discriminate against crypto businesses. However, the agencies' decision to place greater emphasis on material financial risks rather than nonfinancial considerations is relevant to that debate, particularly as crypto companies and industry groups have argued for several years that some banks restricted relationships with digital-asset businesses because of regulatory pressure rather than demonstrated financial risk. For crypto firms, the change could mean easier access to essential banking services such as payment processing, payroll, and corporate accounts, potentially encouraging more traditional financial institutions to engage with digital asset businesses without fear of regulatory retaliation. The narrower definition may limit the grounds examiners use to discourage banks from serving crypto or fintech clients, though actual changes in bank behavior will depend on implementation.
The supervisory guidance was only rescinded in early 2025 after President Donald Trump assumed office. According to AMBCrypto, the current administration has since instructed regulators to remove any barriers that limit crypto and fintech firms from participating in the U.S banking system. As a result, Trump-era regulators have heeded the call, including the recent OCC-FDIC joint rule. The regulatory shift has been evident as the number of OCC bank charter approvals, including those tied to stablecoin issuers and crypto firms, soared during Trump's second term. The OCC has approved or conditionally approved national trust-bank applications involving several digital-asset companies, while Congress has established a federal framework for payment stablecoins through the GENIUS Act. The rule does not require banks to provide services to cryptocurrency companies and also does not remove existing requirements relating to bank safety and soundness, Bank Secrecy Act and anti-money-laundering obligations, sanctions compliance or consumer protection. Banks remain responsible for managing the financial, operational, legal and compliance risks associated with their customers and activities. The rule also does not specifically identify cryptocurrency as an activity that regulators must treat differently from other industries, which is important for crypto companies as a change in examiner guidance does not automatically create a right to a banking relationship or prevent an individual bank from deciding that a particular customer or activity presents unacceptable risk.
The OCC and FDIC are not the only federal banking regulators reconsidering how nonfinancial risks are treated in supervision. The Federal Reserve has separately proposed removing reputation risk as a distinct supervisory consideration, which if finalized would bring the three major federal banking regulators closer to a common approach to reputation risk. The timing matters for the crypto industry because banks with digital-asset clients can fall under different federal supervisory regimes depending on their charter and regulatory structure. The practical significance of the OCC-FDIC rule will depend on how examiners apply the new standards during bank examinations. For crypto businesses, the key question is whether a stronger focus on measurable financial risks reduces the influence of broader nonfinancial concerns when banks assess relationships with digital-asset companies. The rule itself does not answer that question, but what it does establish is a clearer supervisory framework centered on material financial harm and risk to the Deposit Insurance Fund, rather than allowing 'unsafe or unsound practice' to operate without a uniform regulatory definition. The final rule will become effective 60 days after publication in the Federal Register, while the Federal Reserve's separate proposal on reputation risk remains outstanding, and congressional investigations and litigation concerning past crypto-bank relationships continue to shape the broader debate over access to financial services. Industry observers have welcomed the development as a positive sign for the crypto sector, which has long argued that its exclusion from the banking system was unjustified, with the move representing a meaningful step toward curbing regulatory overreach and restoring fair access to banking for lawful businesses.
