U.S. Banking Should Ease Path for Crypto, Republican Taking Reins at FDIC Suggests

The Federal Deposit Insurance Corp. will soon be under new management, and the senior Republican there, Travis Hill, has outlined some pro-crypto policy thoughts just before he’ll take over – at least on a temporary basis, if not as the permanent new chairman.

FDIC Vice Chairman Hill, who is expected to be among those in contention for the job once President-elect Donald Trump takes office, is calling for the U.S. banking regulator to issue new guidance for digital assets. He wants to shed the agency’s current, one-by-one approach to directing banks’ cryptocurrency ties.

“It has stifled innovation and contributed to a public perception that the FDIC is closed for business if institutions are interested in anything related to blockchain or distributed ledger technology,” Hill said in Jan. 10 remarks, which also noted the controversial “pause” letters dug up by a Freedom of Information Act court battle with Coinbase Inc. He suggested those letters illustrated how — in its piecemeal approach to supervising crypto in the banking system — the agency steered many banks away from digital assets business lines.

“I continue to think a much better approach would have been — and remains — for the agencies to clearly and transparently describe for the public what activities are legally permissible and how to conduct them in accordance with safety and soundness standards,” he said. “And if regulatory approvals are needed, those must be acted upon in a timely way, which has not been the case in recent years.”

Hill, who was a Republican appointee to the board two years ago, also criticized the FDIC’s role in pressuring banks to shed crypto clients.

“A longstanding goal of the FDIC’s has been to decrease the number of people who are unbanked,” he said. “Efforts to debank law-abiding customers are unacceptable, regulators must work to end it, and there is no place at the FDIC for anyone who has pushed — explicitly or implicitly — banks to stop serving law-abiding customers. “

Current longtime Chairman Martin Gruenberg has told agency employees he’ll step down on January 19, the day before the inauguration of Trump. In the absence of a chairman, the vice chairman steps into that role on an interim basis.