On February 26, 2026, the Federal Reserve published a proposed rule in the Federal Register to codify the prohibition of using "reputation risk" as a supervisory tool to pressure banks into denying services to lawful businesses — a practice known as debanking that has disproportionately affected the adult entertainment, sex tech, and cannabis industries for over a decade.

Why It Matters

For an industry that has spent decades fighting for basic financial access, the Fed's proposed rule — coming alongside FTC enforcement warnings and OCC findings naming specific banks — represents the most significant federal action against debanking ever taken. If codified, sex tech companies would have regulatory backing when banks refuse service based on the nature of their lawful business. The April 27 comment deadline is an opportunity for industry stakeholders to put their experiences on the record. This could fundamentally reshape the payment and banking landscape for sexual wellness brands, adult content platforms, and pleasure product manufacturers.

The proposed rule builds on the Fed's June 2025 announcement removing reputation risk from bank examination programs and implements the Trump administration's August 2025 Executive Order "Guaranteeing Fair Banking for All Americans." Vice Chair Michelle Bowman stated: "Discrimination by financial institutions on these bases is unlawful and does not have a role in the Fed's supervisory framework." The comment period runs through April 27, 2026.

The proposal follows the Office of the Comptroller of the Currency's December 2025 supervisory review, which found nine of the nation's largest banks — JPMorgan Chase, Bank of America, Citibank, Wells Fargo, US Bank, Capital One, PNC, TD, and BMO — maintained internal policies that "inappropriately" restricted or denied services to adult entertainment businesses, requiring "escalated review" for any adult media connections. Combined with the FTC's March 26 warning letters to Visa, Mastercard, PayPal, and Stripe about debanking, the federal government is now applying pressure from three different agencies simultaneously.

Sources

Update — 2026-03-28

Initial entry — story first created.