When crypto makes peace with the banking system
The crypto industry is not lacking in ambition these days. After years of turbulent relations with traditional financial institutions, the sector is going on the offensive on the regulatory front on both sides of the North Atlantic. Between Washington revising its banking assessment criteria and Ottawa legislating on political donations in cryptocurrencies, the week has been packed with regulatory signals.
In the US, the ‘reputational risk’ concept gets tossed out
If you’ve ever had the feeling that banks refused to work with crypto companies the way a parent refuses to let their child hang out with the “wrong crowd,” you weren’t far off. For years, American regulators used a concept as vague as it was influential: reputational risk. In other words, a bank could face penalties during regulatory examination simply because it partnered with actors deemed… unsavory. And crypto companies often topped this informal blacklist.
But times are changing. The OCC (Office of the Comptroller of the Currency) and the FDIC (Federal Deposit Insurance Corporation), two of America’s top banking regulators, have both finalized rules eliminating this criterion from their regulatory exams. A decision celebrated enthusiastically by crypto industry lobbies, who are now pushing for this reform to be carved even deeper into institutional stone.
What does this actually change in practice? In theory, banks can now partner with exchanges, blockchain projects, or crypto service companies without fear of damaging their regulatory standing. It’s like the referee finally stops calling phantom fouls against one team—the playing field is finally more level.
Of course, skeptics will point out that removing an assessment criterion doesn’t eliminate the real risks associated with the sector. The volatility of digital assets, money laundering risks, and the spectacular bankruptcies of recent years (FTX, Celsius, etc.) remain concrete realities that banks will need to continue managing—just without the regulatory sword of Damocles hanging over their heads in the form of “reputational risk.”
In Canada, crypto stays out of political play
Meanwhile, on the other side of the US border, Canada is heading in a different direction. The Canadian Parliament has taken a decisive step with a vote validating a ban on cryptocurrency donations in political fundraising. Notably, the measure received support from the Conservative party, giving it a fairly rare bipartisan character in the current political landscape.
The reasoning behind this decision is relatively straightforward: political donations are regulated precisely because democracies want to know who funds whom, and in what amounts. Yet cryptocurrencies—particularly those focused on privacy—can make this tracking particularly difficult. Allowing crypto donations in the political sphere would potentially open a loophole in electoral transparency rules.
Canada isn’t the first country to worry about this scenario, and it probably won’t be the last. The question of political financing through digital assets is being closely watched by many governments around the world.
Two approaches, one underlying challenge: responsible integration
What stands out about these two developments is that they illustrate two distinct regulatory philosophies, which ultimately respond to the same objective: defining crypto’s place in our institutions.
The United States, under pressure from lobbies and in a political context favorable to the industry since the new administration arrived, is choosing to relax safeguards seen as arbitrary. Canada, meanwhile, maintains specific safeguards where risks to democracy are deemed real and tangible.
Neither is necessarily “good” or “bad” in itself—it all depends on your vision of the balance between innovation and regulation. What is certain is that crypto continues to force institutions to take clear positions, country after country, issue after issue.
Perspective
We’re witnessing a phase of regulatory normalization of crypto on a global scale. After years of legal vacuums, risky experiments, and spectacular scandals, governments and regulators are gradually drawing lines. Sometimes to open doors (like the US did with the banking sector), sometimes to close them (like Canada did in the political sphere).
Far from being a sign of rejection, this normalization is often interpreted by industry players as a sign of maturity. Crypto is no longer treated as a geeky curiosity or a tolerated no-man’s-land: it has become a regulatory issue in its own right, debated in parliaments and federal agencies.
Remains to be seen whether these developments will create conditions for wider adoption—or whether they’ll chart new terrain of friction between innovation and regulation. The debate is probably only just beginning.
