The US Federal Reserve is inviting public feedback over a two-month period concerning a proposal aimed at eliminating crypto debanking practices.

The aim of this initiative is to codify a rule that removes ‘reputation risk’ from banking supervision, which has contributed to a trend of debanking in the cryptocurrency sector in recent years.

The Fed began its efforts by instructing supervisors last year to cease pressuring banks to terminate client accounts based on their reputational standing, requiring that banks only make decisions based on sound financial risk management.

In a press release, the Fed expressed its intention to convert these recommendations into law, allowing a 60-day period for public comments.

“We have encountered troubling instances where supervisors have invoked reputation risk to compel financial institutions to sever ties with customers based on their political perspectives, religious affiliations, or participation in lawful yet unpopular businesses,” stated Vice Chair for Supervision, Michelle Bowman.

“Discrimination based on these grounds is unlawful and should not be part of the supervisory regime of the Federal Reserve,” she noted.

In a recent post on X, Senator Lummis commended the Fed’s decision, asserting that it was inappropriate for the Federal Reserve to judge and jury banking decisions for digital asset companies. Lummis remarked, “I am pleased to see this crucial move toward permanently eliminating ‘reputation risk’ from Fed policy, allowing America to establish itself as the global leader in digital assets.”

Also praising the Fed’s direction was Alex Thorn from Galaxy Digital, who emphasized in a post that the rollback of Operation Chokepoint 2.0 is ongoing.

Operation Chokepoint 2.0 refers to what many in the crypto community perceive as a coordinated effort by President Biden’s administration and the banking industry to alienate crypto firms from traditional financial services.

The present administration has been actively working to address debanking issues, with former President Trump previously contemplating a draft to direct bank regulators to investigate claims of debanking from crypto companies and conservatives.

Trump is currently entangled in a $5 billion legal dispute with JPMorgan, alleging that the bank unlawfully closed his accounts for political reasons in 2021. While JPMorgan has contended that the lawsuit lacks merit, a former executive admitted in court that the bank closed Trump’s account following the events of January 6.

Related: SEC allows broker-dealers to take 2% ‘haircut’ on stablecoins

It is essential to follow developments closely as this plays out within the regulatory landscape of the financial sector.