The punishment could be removed as early as the first half of 2025, one of the sources said. The three sources declined to be identified because the process is confidential.
The Federal Reserve imposed the asset cap in 2018 and ordered Wells Fargo to fix failings in its governance and risk management after years of consumer abuses.
The asset cap is seen as one of the toughest punishments that U.S. regulators can put in place, and its removal requires a vote by the Fed's board of governors.
While the sources said Wells Fargo had done all the work required to lift the cap, governors could still keep the punishment in place if they have concerns or are not fully satisfied with the fixes.
"The Federal Reserve has no timetable to lift the asset cap," a Fed spokesperson said in a statement late Tuesday.
Lifting the restrictions would be a major step forward for the bank's cleanup efforts. Since the scandal emerged in 2016, it has been fined billions of dollars and slapped with a raft of regulatory punishments, some of which are still in place.
Wells Fargo declined to comment. The Federal Reserve Bank of San Francisco, where the bank is headquartered, declined to comment.
The stock rose 3% in pre-market on the Reuters report, but pared some gains and was up 1.3% before market open.
Shares are expected to respond well on the report that the bank is at the end of this regulatory punishment, Scott Siefers, analyst at Piper Sandler said in a report.
As part of the compliance process, the bank sent a third-party review to the Fed to demonstrate it had overhauled its risk management and controls, Bloomberg News reported in September.
Wells Fargo faced a public outcry and intense scrutiny in the wake of what the Fed called "pervasive and persistent misconduct" that harmed consumers. Most recently, Democratic Senator Elizabeth Warren warned the Fed not to remove the cap until the bank had fixed its risk and compliance issues.
As Republican President-elect Donald Trump takes office, Wall Street bankers expect his administration to overhaul bank regulation and slash burdensome rules on capital and mergers.
Wells Fargo CEO Charlie Scharf said earlier this year that the asset cap is curtailing its ability to take in more corporate deposits and expand its trading business, where peers have grown.
The bank has managed its wholesale deposits and markets businesses carefully to comply with the cap, and those are areas that the company would expect to grow when the restrictions are lifted, Scharf told analysts in October.
"Beyond that, it's just normal growth opportunities that we would see across all different parts of the company," he added.
Rival banks have expanded while the cap was in place. JPMorgan Chase's (JPM.N) assets swelled by more than $1.5 trillion since the start of 2018, while Bank of America (BAC.N) and PNC Financial (PNC.N) added about $1 trillion and nearly $200 billion, respectively.
In February, the Office of the Comptroller of the Currency terminated a 2016 punishment, called a consent order, for the bank's harmful sales practices. The decision was seen as paving the way for the asset cap to be lifted.
Under the 2016 consent order, the bank was mandated to change the way it offered and sold products and services to consumers, and take additional actions to protect customers and employees.
A consent order is a formal, public enforcement action between a regulator and a bank, which often comes with a fine and orders to address an issue in a timely fashion.
The bank still has eight open consent orders. It has closed six since Scharf took the helm in 2019.
He has repeatedly said the regulatory work is the bank's top priority, and cited the closing of consent orders as signs of progress.
