Federal Deposit Insurance Corporation (FDIC) Vice Chairman Travis Hill said that the FDIC's approach to the digital assets industry has impeded innovation in the United States. He expressed these views during a speech on January 10 to the American Bar Association.
"Another area in which a reset is sorely needed is the agency's approach to digital assets and tokenization," said Hill. "In 2021, the banking agencies issued a roadmap describing plans to publish various policy documents in 2022 detailing the agencies' expectations for banks engaging in activities related to digital assets. Ultimately, this work was discontinued in early 2022 following a change in leadership at the FDIC, and instead the agencies established processes in which each institution must engage with its regulator on an individual basis before engaging in any activities related to digital assets or blockchain. I have talked in the past about how damaging this approach has been, as 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."
According to Hill, under the FDIC's forthcoming leadership change, the banking regulator should consider adopting a new strategy towards the cryptocurrency sector. Hill suggested that the FDIC should provide clear guidance to the industry regarding "what activities are legally permissible and how to conduct them in accordance with safety and soundness standards."
The FDIC has been scrutinized for its involvement in "Operation Chokepoint 2.0," which reportedly led banks to restrict access to individuals and companies within the crypto industry due to federal government pressure, as reported by Decrypt.
Christian Catalini, founder of the MIT Cryptoeconomics Lab, said last year that regulatory uncertainty in the U.S. is driving innovation overseas, according to Federal Newswire. Catalini urged the U.S. to "provide greater regulatory clarity for entrepreneurs and startups building in this space," noting that current uncertainties are pushing teams abroad.
As reported by CoinDesk, with the European Union (EU) implementing its Markets in Crypto-Assets (MiCA) legislation—a regulatory framework for digital assets—a French regulator has invited American crypto industry participants seeking legal certainty to France. Benoît de Juvigny, Secretary General of the Autorité des marchés financiers (AMF), said that French people are "proud to be pioneers" in the crypto industry and added, "If American players want to benefit, in the very short term, from the French regime, and from the start of 2025 from European arrangements, clearly they are welcome." Several crypto companies including Bittrex have ceased their U.S. operations due to a regulatory environment characterized by active enforcement but lacking comprehensive regulations.
Before his appointment as FDIC Board of Directors Vice Chairman in January 2023, Hill served as Deputy to the Chairman for Policy and Senior Advisor to the Chairman of the FDIC. From 2013 to 2018, he was Senior Counsel to the U.S. Senate Committee on Banking, Housing, and Urban Affairs.