Vice President of the US Agency FDIC Spoke About Cryptocurrencies: It Looks Like a New Era is Beginning!

Addressing criticism that the government is excluding the crypto industry, U.S. Federal Deposit Insurance Corporation (FDIC) Deputy Chairman Travis Hill said: crypto para He called for a more transparent and open approach to regulation.

In a speech published today, Hill said clearer guidelines are needed on how banks can work with digital assets. “The agency should take a more open-minded approach to technology,” said Hill, who is expected to become acting chairman of the FDIC. Hill, who is nominated as a Republican in 2022, currently serves as the institution’s second-in-command.

Hill’s statements come amid concerns that the FDIC is discouraging financial institutions from participating in crypto-related activities. Coinbase sued the FDIC in June, claiming the agency had issued “pause letters” instructing banks to halt crypto activities. The lawsuit also sought disclosure of these letters, which the FDIC Office of Inspector General confirmed were sent between March 2022 and May 2023.

While the FDIC argued that it did not prohibit banks from working with crypto, Hill criticized the agency’s case-by-case approach to digital asset participation. “This approach has stifled innovation and contributed to the perception that the FDIC is closed to business when it comes to blockchain and distributed ledger technology,” he said.

Hill also referenced “Operation Choke Point,” an initiative launched by the Justice Department in 2013 that aimed to restrict banking services to industries deemed high-risk for fraud, such as payday lenders and firearms dealers. The crypto industry coined the term “Operation Choke Point 2.0” to describe perceived efforts to cut off digital asset companies’ access to banking services.

Calling for an end to such tactics, Hill said: “While taking a new approach to digital assets and ending all tactics like Choke Point are important first steps, regulators also need to re-evaluate our approach to enforcing the Bank Secrecy Act (BSA). ” He argued that the current BSA framework encourages banks to close accounts rather than risk hefty fines for non-compliance, potentially stifling legitimate businesses.

Hill also criticized the US Securities and Exchange Commission’s (SEC) controversial crypto accounting guidance known as Staff Accounting Bulletin 121 (SAB 121). The 2022 rule requires companies that provide cryptocurrency custody services to record customer assets as liabilities on their balance sheets. Hill noted that this practice differs from how custodians typically handle other assets that are recorded off-balance sheet as client property.

Despite the criticism, the FDIC’s 2024 Risk Review stated that banking institutions are “neither prohibited nor prevented” from providing services to crypto-related businesses.

*This is not investment advice.