In a sign of evolving attitudes toward digital assets, two recent developments suggest a more measured and practical approach to crypto regulation in the United States. The Federal Deposit Insurance Corporation (FDIC) announced plans to eliminate the use of “reputational risk” in bank supervision—an often-criticized factor in the debanking of crypto firms—while the Securities and Exchange Commission (SEC) closed its investigation into Web3 gaming platform Immutable without pursuing enforcement action.
FDIC Moves to Eliminate “Reputational Risk” as a Supervisory Tool in Shift Toward Crypto-Friendly Oversight
The Federal Deposit Insurance Corporation (FDIC) has revealed plans to eliminate “reputational risk” as a factor in bank supervision. The shift is being heralded by digital asset advocates as a long-overdue step toward a more transparent and fair regulatory environment, especially for blockchain-based businesses long sidelined by traditional financial institutions.
According to a letter dated March 24 from FDIC Acting Chairman Travis Hill to US Representative Dan Meuser, the agency has completed a comprehensive review of all mentions of reputational risk across its regulatory and policy frameworks. As a result, the FDIC now “plans to eradicate this concept from our regulatory approach.”
“While a bank’s reputation is critically important, most activities that could threaten a bank’s reputation do so through traditional risk channels (e.g., credit risk, market risk, etc.) that supervisors already focus on,” Hill wrote, emphasizing a more objective and quantifiable framework for supervision. The letter, first reported by Politico, signals a growing recognition that reputational risk—a vague and often subjective regulatory standard—has been misused to marginalize certain industries.
The Federal Reserve defines reputational risk as “the potential that negative publicity regarding an institution’s business practices, whether true or not, will cause a decline in the customer base, costly litigation, or revenue reductions.” Critics argue that this broad and nebulous standard has been weaponized to restrict banking access to industries that are politically or socially controversial, regardless of their actual financial or operational risk.
Nowhere has the impact of reputational risk been more acutely felt than in the digital asset sector. Blockchain startups, cryptocurrency exchanges, and Web3 developers have struggled for years to obtain or maintain banking relationships, with some institutions citing reputational concerns as justification for abrupt account closures or rejections.
This systemic issue gained national attention in 2023, following the collapse of several crypto-friendly banks, and the subsequent wave of what many labeled Operation Chokepoint 2.0—a reference to the Obama-era program that allegedly pressured banks to sever ties with industries deemed “high-risk,” including firearms dealers, payday lenders, and later, crypto firms.
More than 30 digital asset and tech companies were reportedly debanked during this period, with no clear path to regulatory recourse. Critics argued that these decisions were not based on measurable financial risks but rather ideological or reputational judgments made behind closed doors.
Acting Chairman Hill’s letter marks a notable change in tone and substance. In it, Hill acknowledges that the FDIC has been “closed for business” to institutions interested in blockchain or distributed ledger technologies. However, he also revealed that the agency is now “working on a new direction for digital asset policy” with the goal of providing a pathway for banks to safely and responsibly engage with the sector.
The letter was sent in response to a February initiative from Rep. Meuser and several other lawmakers, who had urged US financial regulators to adopt clear digital asset policies and put an end to arbitrary debanking practices. Their communication included a list of recommendations for crafting digital asset rules that promote innovation while safeguarding financial stability.
Hill’s response may signal that such recommendations are being taken seriously, at least at the FDIC. While it remains to be seen how other regulatory bodies—such as the Office of the Comptroller of the Currency (OCC) and the Federal Reserve—will follow suit, the move could lay the groundwork for a more inclusive regulatory environment for digital assets in the United States.
Industry and Lawmaker Reactions
The crypto industry has responded positively, with many seeing the move as a clear repudiation of the informal but damaging barriers that have long limited institutional engagement with Web3 technologies.
The FDIC’s planned removal of reputational risk from its supervisory vocabulary does not automatically translate into regulatory clarity or guaranteed access for crypto companies. However, it eliminates a major institutional barrier and signals that the agency is willing to reevaluate the way it governs financial innovation.
SEC Closes Investigation into Immutable, Signaling Major Win for Web3 Gaming Industry
In other news, Ethereum layer-2 developer Immutable announced that the US Securities and Exchange Commission (SEC) has formally ended its investigation into the company, deciding not to pursue any enforcement action. The development marks a critical turning point for the rapidly evolving GameFi space and adds momentum to a broader shift in regulatory posture toward blockchain innovators.
In a statement issued on March 25, Immutable said the closure of the SEC’s inquiry effectively “closes the loop” on a Wells notice the firm received in late 2023. The Wells notice — a warning that the SEC may bring a lawsuit after believing it has uncovered violations of securities law — had sparked concern throughout the blockchain gaming world, which has long been in regulatory limbo.
“We are pleased the SEC has concluded its inquiry. This marks a significant milestone for the crypto industry and gaming as we advance towards a future with regulatory clarity,” said Robbie Ferguson, president and co-founder of Immutable.
An Immutable spokesperson said that the company received an unexpected termination letter from the SEC, which offered no rationale for why the agency had closed the case. The decision came without any further communication or demand for action, and appears to be based solely on the information Immutable had previously provided.
Immutable was under scrutiny over a 2021 blog post describing the listing and private sale of its IMX token, including claims around pre-launch token pricing and valuation. The SEC reportedly took issue with a statement that pre-launch investors bought IMX at $0.10, issued at a "$10 pre-100:1 split" — an assertion the SEC considered potentially misleading regarding the nature of the transaction.
Immutable had previously expressed strong confidence in its compliance position, stating that there was a legitimate exchange of value and that it would “vigorously defend” itself if needed. With the investigation now closed, that defense will no longer be necessary — at least from the SEC.
While the federal regulator has stepped back, Rosen Law Firm, a New York-based securities class-action specialist, has sought to use the now-defunct Wells notice as a foundation for a private lawsuit over the IMX token. Immutable’s spokesperson brushed off the potential legal challenge, saying the company is “not concerned” about it.
A New Era of Regulatory Rollbacks?
The SEC’s decision to halt its probe into Immutable is part of a broader pattern. Over recent months, the agency has also dropped investigations into high-profile crypto entities including OpenSea, Robinhood, Uniswap Labs, and Gemini.
Many of these rollbacks have occurred under the renewed leadership direction of President Donald Trump, whose administration has taken steps to dismantle aggressive enforcement strategies that gained traction during previous years. Trump has repeatedly promised to “liberate” the crypto industry from what he characterized as stifling regulation and bureaucratic hostility.
In addition to closing investigations, the SEC has scaled back or abandoned several lawsuits — most notably against Ripple Labs, Coinbase, and Kraken — which had once been seen as emblematic of the regulator’s hardline stance.
The conclusion of the SEC’s investigation could be a significant confidence boost for Web3 gaming platforms and investors. For years, major AAA game studios and traditional gaming publishers have cited legal uncertainty as a key reason for staying on the sidelines of blockchain gaming.
Immutable, which powers the Immutable X layer-2 network on Ethereum, has positioned itself as a pioneer in blockchain gaming infrastructure. With a strong lineup of partnerships and a growing ecosystem of Web3 game titles, the regulatory green light is likely to embolden other platforms to enter the space or scale their operations.
