U.S. Senator Tim Scott Introduces Bill to Prevent Regulatory Action Against Banks Based on "Reputation Risk"

BlockBeats News, March 6th, according to The Block report, U.S. Senate Banking Committee Chair Tim Scott introduced a bill aiming to prohibit regulatory agencies from regulating banks based on "reputational risk." This move is a response to the crypto industry's accusation that U.S. government agencies have excluded it from the financial system.

This Republican senator from South Carolina submitted the bill on Thursday and stated in a press release that the legislation would "limit the weaponization of federal banking agencies and remove the power of regulatory agencies to use 'reputational risk' in the regulatory process."

The Fed defines "reputational risk" as: "The risk arising from negative public opinion regarding an institution's business practices (whether true or not) that could lead to customer attrition, costly litigation, or revenue loss."