FDIC Official Calls for Improved Digital Asset Policy to Preserve US Influence

During a speech at the Mercatus Center, Travis Hill, vice chair of the US Federal Deposit Insurance Corporation (FDIC), expressed concerns about the potential negative impact of poorly regulated blockchain technology on bank customers and the US economy. Hill admitted that the US is already at risk in this area, and the FDIC shares some of the blame. He highlighted the potential benefits of tokenization, such as the ability to carry out real-time financial transactions and programmable payments, which could lead to improved settlement times. Hill also warned about the risks associated with programmability, including the possibility of quick asset movements exacerbating bank runs. He argued that regulation is necessary to prevent this and criticized the FDIC’s current approach, which treats all blockchain transactions the same and burdens institutions with excessive information requests. Hill called for clear guidance and consistency among regulators in treating all types of deposits equally. He also criticized the Securities and Exchange Commission’s SAB 121, which requires financial institutions to treat crypto assets differently, even when they are tokenized real-world assets. Hill recommended a more inclusive definition of crypto assets in the bulletin.