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Travis Hill, vice chairman of the FDIC, criticized the U.S. banking restrictions on handling digital assets for clients.
On Monday, Hill urged a proactive approach to blockchain technology, indicating that current regulatory stances hinder innovation.
He <a href="https://www.bloomberg.com/news/articles/2024-03-11/fdic-vice-chair-says-us-should-soften-stance-on-digital-assets?utm_content=crypto&amp;utm_medium=social&amp;utm_source=twitter&amp;utm_campaign=socialflow-organic" data-type="link" data-id="https://www.bloomberg.com/news/articles/2024-03-11/fdic-vice-chair-says-us-should-soften-stance-on-digital-assets?utm_content=crypto&amp;utm_medium=social&amp;utm_source=twitter&amp;utm_campaign=socialflow-organic" target="_blank" rel="noopener noreferrer nofollow">emphasized</a> the need for clarity in policies regarding permissible actions and standards for safety and soundness. Hill, who previously worked as a Republican Senate staffer, pointed out the challenges in policy-making due to the rapid evolution of technology.
In 2022, top U.S. bank regulators, including the FDIC, Federal Reserve, and Office of the Comptroller of the Currency, warned banks about the risks of engaging with <a href="https://crypto.news/market-cap/" data-type="link" data-id="https://crypto.news/market-cap/" rel="noopener noreferrer nofollow">cryptocurrencies</a>, highlighting concerns over volatility. The agencies stressed the importance of preventing uncontrollable risks from affecting the banking system.
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Hill criticized the FDIC’s apparent reluctance to collaborate with industry entities interested in exploring blockchain or distributed ledger technologies for purposes beyond cryptocurrency, such as tokenized deposits.
“The confidential nature of the existing process means there is little public information on what types of activities the FDIC might be open to, if any,” Hill said.
He called for more precise distinctions between crypto and <a href="https://crypto.news/tag/tokenization/" data-type="link" data-id="https://crypto.news/tag/tokenization/" rel="noopener noreferrer nofollow">tokenization</a>, the latter referring to digital representations of physical assets often utilizing blockchain technology.
Additionally, Hill commented on the SEC’s guidance requiring firms to treat crypto assets as liabilities on balance sheets, diverging from traditional custodian accounting practices.
The vice chairman argued that this guidance, Staff Accounting Bulletin <a href="https://www.sec.gov/oca/staff-accounting-bulletin-121" target="_blank" rel="noopener noreferrer nofollow">No. 121</a>, hampers banks’ ability to expand digital asset services for customers by increasing costs. Since its publication in 2022, this has sparked criticism from the banking sector.
Read more: <a href="https://crypto.news/donald-trump-crypto-tolerance/" rel="noopener noreferrer nofollow"> Donald Trump teases crypto tolerance if elected </a>

FDIC Vice Chair advocates for more flexible approach to digital assets

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