US Senate Banking Committee Chairman Sponsors Debanking Bill After Cryptocurrency Scandal
Jesse Hamilton | Edited by Nikhilesh De on Mar 6, 2025, 17:42 UTC
An ongoing industry push to de-bank cryptocurrency companies and their executives has received legislative support from influential U.S. Senator Tim Scott, who is backing a bill that would prohibit federal banking regulators from using “reputational risk” as grounds to deny service to customers.
Republicans highlighted the practice as problematic at a recent congressional hearing that discussed how digital asset companies have been systematically excluded from banking relationships in the U.S. because regulators including the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency did not want them there.
As chairman of the Senate Banking Committee, Tim Scott of South Carolina has rallied his Republican colleagues to support a bill, the Financial Integrity and Regulatory Management Act, or FIRM Act, that would remove reference to reputational risk from any regulator’s assessment of a bank’s safety and soundness.
“It is clear that federal regulators have abused the concept of reputational risk to pursue a political agenda against legitimate businesses,” Scott said in comments on the bill, noting that ending debanking is one of his top priorities. “This legislation, by eliminating references to reputational risk in regulatory oversight, would be the first step toward ending debanking for good.”
Sen. Cynthia Lummis, a Wyoming Republican and chair of the House Digital Assets Subcommittee, recently raised the issue as an issue of Federal Reserve oversight.
“Americans deserve a transparent regulatory framework that encourages innovation in digital assets, not stifles it with excessive government intervention,” she said in a statement.
Consumer advocates and some Democrats, including Sen. Elizabeth Warren, argue that regulators’ focus on digital assets has been warranted following the collapse of several major companies, fraud allegations against industry executives, significant hacks of digital asset platforms and general market instability that have posed a threat to investor safety.
Read more: Cryptocurrency Debanking Concerns Take Back the Big Stage in the US House of Representatives
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