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The FDIC’s Deputy Director, Travis Hill, made significant statements regarding the cryptocurrency sector.
FDIC Deputy Director Travis Hill’s Remarks on Crypto Regulations
Travis Hill, the Deputy Director of the Federal Deposit Insurance Corporation (FDIC), criticized the government’s exclusionary approach towards the cryptocurrency sector, emphasizing the need for more open and transparent regulation.
Hill highlighted the necessity of clear and detailed guidelines for banks on how to collaborate with digital assets. He pointed out that the FDIC should adopt an approach that does not hinder banks from working in line with technology and supports innovation.
Clear Guidelines Needed for Banks Working with Digital Assets
In his remarks, Hill stated that banks need more clarity and guidance when it comes to working with digital assets. Recently, concerns have emerged regarding the FDIC’s efforts to discourage banks from participating in crypto activities.
In June, Coinbase filed a lawsuit against the FDIC, claiming that the agency issued directives to banks to halt their crypto operations. Following this lawsuit, Hill stressed that the FDIC should adopt a more flexible, case-by-case approach to digital assets.
He further emphasized that, with proper regulations, the growth of the cryptocurrency industry can be integrated into the financial system without hindering its development.
Criticism of “Operation Choke Point 2.0” and the Bank Secrecy Act
Hill also criticized the “Operation Choke Point” program, which aimed to restrict banking services for high-risk sectors associated with fraud.
The cryptocurrency industry had described attempts to block digital asset companies’ access to banking services as “Operation Choke Point 2.0.” Hill stated that such practices should be terminated and emphasized the need for a new approach towards digital assets.
Additionally, Hill pointed out the current practices under the Bank Secrecy Act (BSA). He argued that the BSA compels banks to close accounts instead of addressing non-compliance risks, which may negatively impact legitimate businesses. He called for a reevaluation of how the BSA is enforced.
Hill stressed the need for removing obstacles to banks working with the crypto sector, provided there are clear regulations and guidelines.
Criticism of the SEC’s Crypto Accounting Rules
Hill also criticized the 2022 accounting guidance issued by the U.S. Securities and Exchange Commission (SEC), which requires crypto custody firms to record customer assets on their balance sheets. He pointed out that this rule contradicts the common practice of keeping customer assets off the balance sheets of custody institutions.
Hill noted that this regulation could complicate the operations of custody firms within the sector.
In conclusion, Hill emphasized that banks are not prohibited from engaging in crypto-related activities, and as stated in the FDIC’s 2024 Risk Review, banks face no restrictions in providing services to crypto businesses.
These statements once again highlighted the need for a more transparent regulatory process.
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