Senator Tim Scott is advocating for a bill aimed at ending the practice of debanking within the financial sector. This legislation seeks to terminate the use of “reputational risk” by banking regulators when determining whether to engage with clients.

Key Points:

• Senator Tim Scott, as chairman of the Senate Banking Committee, is proposing a measure to restrict regulators from using reputational concerns to pressure banks into severing ties with certain customers.
• The crypto industry has strongly opposed this strategy, arguing that it discriminates against lawful businesses.

Scott stated, “It’s clear that federal regulators have abused reputational risk by carrying out a political agenda against federally legal businesses. This legislation is the first step in ending debanking once and for all.”

Additionally, Cynthia Lummis, a Wyoming Republican, emphasized the need for a transparent regulatory structure to promote innovation in digital assets.

On the contrary, consumer advocates and several Democrats like Elizabeth Warren maintain that scrutiny of the digital asset sector is justified considering past failures and market volatility.

For updates, follow the full article on CoinDesk.