The FDIC has thrown open the gates to crypto innovation, scrapping key barriers and embracing blockchain with a push for regulatory clarity.
FDIC Shifts Crypto Rules, Sets the Stage for Digital Asset Banking Boom
Acting Chairman Travis Hill used his address at the American Bankers Association’s Washington Summit on April 8 to lay out the U.S. Federal Deposit Insurance Corporation’s (FDIC) updated stance on digital assets and blockchain technology, emphasizing a shift toward regulatory openness.
Hill highlighted that the FDIC has already revised key policies to reduce barriers for banks interested in crypto-related activities. The agency recently rescinded its requirement for prior notification of such activity, a rule that had effectively discouraged participation. “FDIC-supervised institutions may engage in permissible crypto-related activities without receiving prior FDIC approval,” Hill stated:
Permissible crypto-related activities will generally be treated just like other permissible activities.
He stressed that while banks must still manage associated risks, the goal is to ensure innovation can proceed under clear, consistent oversight. Hill questioned whether the agency should further define what crypto services are allowed, citing earlier determinations by the Office of the Comptroller of the Currency (OCC) regarding custody services, stablecoin reserves, and validator node operations.
“Are there crypto-related activities for which regulators should proactively provide clarity with respect to permissibility?” he asked. He also pointed to the importance of developing standards around public blockchains, noting that other countries permit banks to operate on public, permissionless chains, while U.S. regulators have effectively blocked this. “While a complete prohibition on interacting with public chains is clearly too restrictive, what guardrails would be prudent?” he asked. The FDIC aims to revisit 2023 interagency guidance and issue durable standards to govern banks’ use of public chains responsibly.
The discussion also addressed stablecoin legislation currently progressing through Congress. Hill called attention to the need for banks to understand how liquidity risk, cybersecurity, and compliance apply to stablecoins, especially as deposits are tokenized. He proposed reevaluating pass-through deposit insurance regulations to clarify how stablecoin reserves are treated.
“From the FDIC’s perspective, we should provide certainty that ‘deposits are deposits, regardless of the technology or recordkeeping deployed,’” he said. He also emphasized the importance of ensuring that smart contracts on blockchains cannot be used to withdraw funds after a bank’s failure, warning that this could significantly raise the cost of bank resolutions. Hill concluded by asserting the FDIC’s commitment to crafting a regulatory framework that encourages responsible digital asset innovation while upholding safety and soundness.
