FDIC’s Deputy Chairman promotes a call for increased flexibility in dealing with digital assets
Travis Hill, the FDIC’s vice chairman, expressed his disapproval of the current U.S. banking restrictions on managing digital assets for clients. Hill believes that these regulatory positions are hindering innovation and called for a proactive approach to blockchain technology.
Hill highlighted the importance of clarity in policies regarding permissible actions and safety standards. He acknowledged the challenges in policymaking due to the rapidly evolving nature of technology. Hill, who previously worked as a Republican Senate staffer, emphasized the need for the banking industry to adapt to the changing landscape.
In 2022, top U.S. bank regulators, including the FDIC, Federal Reserve, and Office of the Comptroller of the Currency, issued warnings about the risks associated with cryptocurrencies. They specifically mentioned concerns about volatility and stressed the importance of preventing these risks from affecting the banking system.
Hill criticized the FDIC for its apparent reluctance to collaborate with industry entities interested in exploring blockchain or distributed ledger technologies for purposes other than cryptocurrency, such as tokenized deposits. He highlighted the lack of public information on the types of activities the FDIC might be open to and called for more precise distinctions between crypto and tokenization.
Hill also commented on the SEC’s guidance that requires firms to treat crypto assets as liabilities on balance sheets, which diverges from traditional custodian accounting practices. He argued that this guidance, known as Staff Accounting Bulletin No. 121, increases costs and hampers banks’ ability to expand digital asset services for customers. The banking sector has criticized this guidance since its publication in 2022.
Overall, Hill’s criticisms and suggestions aim to encourage a more innovative and adaptable approach to digital assets within the U.S. banking industry.