FDIC Vice Chairman Travis Hill criticized U.S. banks’ restrictions on handling their customers’ digital assets.
On Monday, Hill called for a proactive approach to blockchain technology, indicating that the current regulatory stance stifles innovation.
He emphasized the need for policy clarity on acceptable measures and standards for safety and soundness. Hill, who previously worked as a Republican Senate aide, noted that rapid technological advancements pose challenges to policymaking.
In 2022, top U.S. banking regulators, including the FDIC, the Federal Reserve, and the Office of the Comptroller of the Currency, warned banks about the risks of cryptocurrency trading, highlighting concerns about volatility. The agencies emphasized the importance of preventing uncontrollable risks from affecting the banking system.
Hill criticized the FDIC’s apparent reluctance to work with industry bodies interested in exploring blockchain or distributed ledger technology for purposes beyond cryptocurrencies, such as tokenized deposits.
“The confidential nature of the existing process means there is very little public information about what types of activities the FDIC is open to,” Hill said.
He called for a more precise distinction between cryptocurrency and tokenization, which refers to the digital representation of physical assets, often utilizing blockchain technology.
Hill also mentioned the SEC’s guidance requiring companies to treat cryptocurrency assets as liabilities on their balance sheets. This is different from traditional managerial accounting practices.
The Vice-Chairman shall comply with this guideline, Employee Accounting Bulletin No. 121 argued that rising costs were hindering the bank’s ability to expand digital asset services for its customers. This has sparked criticism in the banking industry since its publication in 2022.