- Senator Tim Scott is leading the Financial Integrity and Regulation Management Act (FIRM Act) to prevent regulators from using “reputational risk” to block crypto businesses from banking services.
- GOP senators, including Cynthia Lummis and Thom Tillis, support the legislation, arguing that regulators have weaponized the concept of reputational risk for political purposes.
- The initiative reflects growing Republican support for the cryptocurrency industry, with former President Trump also backing the sector.
Senate Banking Committee Chairman Tim Scott is spearheading legislation to prohibit federal regulators from using “reputational risk” assessments to prevent banks from serving cryptocurrency businesses. The Financial Integrity and Regulation Management Act (FIRM Act) aims to address what Republicans describe as systematic exclusion of crypto companies from traditional banking systems.
The legislation comes in response to complaints from cryptocurrency businesses that have struggled to access banking services. Many financial institutions have refused to work with crypto companies, fearing regulatory backlash or damage to their reputation—a concern that has been highlighted during recent congressional hearings.
“Federal regulators have abused reputational risk to carry out a political agenda against legally operating businesses,” stated Chairman Scott, who believes that eliminating references to reputational risk in regulatory supervision represents a critical first step in ending the practice of debanking.
The FIRM Act has garnered substantial support from fellow Republican lawmakers. Cynthia Lummis, who chairs the Senate Banking Subcommittee on Digital Assets, emphasized the importance of establishing clear regulatory frameworks for the crypto industry rather than restricting its growth.
“Rogue regulators will no longer have unchecked power,” Lummis stated, advocating for transparent rules that support digital asset innovation without excessive government intervention.
Senator Thom Tillis also voiced strong support for the legislation, criticizing financial regulators for what he characterizes as targeting specific businesses and individuals under the subjective concept of reputational risk. “Financial regulators have used reputational risk to target people and businesses they don’t like,” Tillis argued, suggesting the FIRM Act would refocus regulatory attention on legitimate financial concerns.
The initiative reflects the Republican Party’s growing alliance with the cryptocurrency sector. This supportive stance extends to former President Trump, who has criticized banks for refusing services to conservatives, adding another dimension to the broader debanking debate.
The push for the FIRM Act represents one of several legislative efforts to create clearer regulatory boundaries for the rapidly evolving cryptocurrency industry, as lawmakers continue to grapple with balancing innovation, consumer protection, and financial stability.
Financial advisors remind investors that cryptocurrency investments involve significant market risks and recommend careful consideration before making investment decisions.
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