Federal Depositary Insurance Corporation (FDIC) Vice Chairman Travis Hill delivered a speech on Friday condemning the agency’s “Choke Point-like tactics” and urging the organization to take “a new approach to digital assets.”
Hill’s speech came just a week after the FDIC reluctantly published a secret stash of letters it sent to banks engaged in crypto-related activities, prohibiting them from continuing with their projects. Cryptocurrency exchange Coinbase forced the agency to release the confidential letters via a June 2024 court order after the FDIC turned down Coinbase’s Freedom of Information Act (FOIA) request.
The agency has been embroiled in various controversies ranging from sexual harassment in the workplace – which resulted in Chairman Martin Gruenberg’s resignation last November – to intentional debanking of the crypto industry as alleged by Coinbase.
And now Hill, a Republican appointee, rumored to be Donald Trump’s top pick, has vowed to take the FDIC in a new direction and to end the agency’s alleged attempts to debank crypto.
“In ten days, there will be a change in leadership at the FDIC. The agency needs a new direction,” Hill said. “Adopting a new approach to digital assets and putting an end to any and all Choke Point-like tactics are essential first steps.”
Hill delivered a scathing criticism of the agency’s current bank supervision practices. He lamented the failure of Silicon Valley Bank which housed clients such as USDC stablecoin issuer Circle, pointing out that most criticisms against SVB “were unrelated to financial risks” and that the one issue that was financial in nature was really a criticism of the bank’s financial modelling, not an “actual hole in the bank’s balance sheet.”
He implored the agency to be more open-minded about innovative technologies and suggested hiring more tech-savvy staff.
Hill specifically bemoaned the FDIC’s approach to crypto innovation and encouraged a return to the agency’s 2021 plan where it appears crypto policy roadmaps were drafted before what seems to have been a sudden anti-crypto pivot when Gruenberg returned as chairman for the third time in 2022. The original Choke Point fiasco took place during Gruenberg’s previous chairmanship.
(Disgraced FDIC Chairman Martin Gruenberg / FDIC.gov)
“There have been various accounts of individuals and businesses associated with the crypto industry losing access to bank accounts without explanation,” Hill said. “There is no place at the FDIC for anyone who has pushed – explicitly or implicitly – banks to stop serving law-abiding customers.”
Topics such as staying out of climate change-related politics and reassessing banking capital requirements were also part of Hill’s speech, but crypto was undoubtedly the main course.
“Efforts to debank law-abiding customers are unacceptable,” Hill declared. “Regulators must work to end it.”
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