US Senator Tim Scott proposes a bill to prevent banks from being regulated on the grounds of 'reputational risk'

On March 6th, according to The Block, Tim Scott, Chairman of the U.S. Senate Banking Committee, proposed a bill to prohibit regulatory agencies from regulating banks on the grounds of "reputational risk". This move is a response to accusations from the cryptocurrency industry that US government agencies have excluded it from the financial system. The Republican senator from South Carolina submitted the bill on Thursday and stated in a statement that the legislation would "limit the weaponization of federal banking institutions and eliminate the power of regulators to use 'reputational risk' in the regulatory process The Federal Reserve defines "reputation risk" as "the risk of customer loss, high litigation costs, or decreased revenue due to negative public opinion (whether true or false) about an institution's business practices