FDIC Vice Chair Travis Hill has criticized past actions by federal agencies that limited banks’ involvement in crypto activities.
He said these measures, including the use of “pause letters,” hindered innovation and created the perception that regulators were blocking blockchain development.
Calls to End Restrictive Banking Practices Like Operation Chokepoint
Hill urged an end to practices resembling “Operation Chokepoint” and called for changes to the enforcement of the Bank Secrecy Act. He highlighted the need to reduce the pressure on banks to shut down accounts over fears of heavy penalties for non-compliance.
He also expressed support for better collaboration with the crypto sector.
In a speech published Friday, Hill suggested the FDIC take a more open approach to digital assets. He emphasized the need for clearer guidelines on how banks can safely engage with cryptocurrencies.
Hill, who has been Vice Chair since 2022, is expected to serve as acting chair of the agency, which insures US bank deposits.
“There is a healthy balance between (1) allowing banks to evolve with the times and (2) ensuring banks continue to manage risks prudently, and in recent years the FDIC has done a poor job striking that balance,” he said.
His comments come as the crypto industry raises concerns about regulatory overreach. Coinbase sued the FDIC in June, accusing the agency of trying to sever ties between the banking and crypto sectors.
The lawsuit, which also sought access to the “pause letters,” alleged that these actions unfairly targeted the industry.
