TLDR
- Coinbase has formally challenged a banking rule it says was used to pressure banks against serving crypto firms.
- The company supported a joint OCC and FDIC proposal to eliminate reputational risk from supervisory guidelines.
- Coinbase claimed regulators used the vague concept of reputational risk to unfairly target lawful digital asset businesses.
- The exchange said internal communications revealed behind-the-scenes efforts to isolate crypto firms from the banking system.
- Coinbase urged regulators to completely ban the use of reputational risk in bank oversight to prevent future misuse.
Coinbase has filed a formal challenge against what it describes as a politically motivated banking rule, accusing federal regulators of pressuring banks to cut ties with crypto firms through the misuse of “reputational risk,” a term the company calls vague and unaccountable, and has urged its full removal from regulatory guidelines.
Coinbase Supports OCC, FDIC Plan to Remove Reputational Risk Standard
Coinbase expressed support for a proposed rule by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The proposal aims to remove “reputational risk” from the agencies’ supervisory frameworks for banks.
Faryar Shirzad, Coinbase’s chief policy officer, stated the rule has been weaponized against lawful crypto activities. He said regulators used the concept as a “supervisory hammer” against banks serving crypto clients.
Coinbase claimed that reputational risk lacks a clear definition and measurable standards, making it prone to misuse. It warned that this allows political agendas to influence banking decisions.
The company urged that supervision focus only on quantifiable risks tied to law, safety, or soundness. Shirzad noted, “Subjective standards invite arbitrary enforcement, not transparency.”
Coinbase has asked the agencies to go beyond the current proposal. It wants a full ban on the use of reputational or similar risks.
The company stressed that partial reforms may not stop the practice from returning under different terms. It said banks may still deny service citing public image concerns.
Coinbase Cites Evidence of Targeted Regulatory Action
In its letter, Coinbase included findings from Freedom of Information Act requests and related litigation. It claimed internal records revealed banks were discouraged from serving crypto clients.
According to Coinbase, communications between supervisors show specific crypto firms were flagged without legal basis. The company said it was directly affected.
As we said in our letter:
“Use of reputation risk is dangerous because it is a nebulous, subjective, and shifting concept that cannot be directly tied to a negative financial impact or a violation of law, which are the only factors that should be taken into account for…
— Faryar Shirzad 🛡️ (@faryarshirzad) January 5, 2026
Coinbase said the restrictions disrupted its employee banking access. It claimed these actions occurred without public accountability or due process.
The company said this pattern shows hidden supervision that harms legal businesses. It urged transparency and rule-based oversight.
It also called for adverse supervisory actions to link only to measurable risks. Coinbase listed credit, liquidity, operational, and compliance as examples.
U.S. Regulators Probe Bank Restrictions on Crypto Firms
Regulators have faced scrutiny over alleged informal efforts to restrict crypto industry access to banking services. Lawmakers and crypto leaders have raised concerns.
They claim regulators issued off-the-record warnings to banks. These discouraged services to crypto clients without formal rules.
Regulators deny the allegations. They argue decisions were based on anti-money-laundering obligations and general safety concerns.
In December, JPMorgan CEO Jamie Dimon addressed these claims. He denied politically motivated account closures.
His response followed accusations from Strike CEO Jack Mallers. Mallers said his accounts were shut without explanation.
In the same month, the OCC published initial findings. It found all nine of the largest U.S. national banks had imposed improper restrictions.
These included actions taken against legal digital asset firms. Comptroller Jonathan Gould confirmed the practices violated fair banking access principles.
The OCC said the review covered 2020 to 2023. It was launched under a 2020 executive order promoting equal financial access.
