WASHINGTON — Federal Deposit Insurance Corp. vice chair Travis Hill Monday said federal bank regulators’ the slow pace in providing clarity to companies interested in utilizing blockchain and distributed ledger technology might be surrendering U.S. influence in an evolving sector of the financial industry.
“While the largest banks are able to hire consultants and staff in Washington, D.C. to read the tea leaves to discern what might be approved, the message being heard by the vast majority of the industry could be interpreted as don’t bother trying,” Hill said. “Our goal should still be to provide as much clarity as is feasible regarding what is permissible and what we consider safe and sound [and] to the extent that we need to maintain a bank-by-bank approval process, it is critical that we provide feedback to institutions in a timely way.”
In 2021, the agencies
In addition, Hill also argued the agencies need to distinguish between cryptocurrency and the use by banks of blockchain and distributed ledger technologies.
“I do not think banks interested in the latter, insofar as it simply represents a new way of recording ownership and transferring value, should need to go through the same gauntlet as banks interested in crypto,” said Hill.
Hill also renewed his
Hill argued the agency should take stakeholder and industry comment if it decides it needs to distinguish tokenized deposits from traditional deposits for regulatory or reporting purposes.
“As financial institutions and developers around the world continue to develop blockchain and distributed ledger technologies, a poor regulatory approach to these issues presents substantial opportunity costs for bank customers and the U.S. economy, discourages institutions from investing in the future, and cedes influence to non-U.S. jurisdictions,” said Hill.
Hill also touched separately on the SEC’s
Hill is not alone in questioning the rule. His Democratically appointed colleague Michael Hsu, along with Fed Chair Jerome Powell,
“I think this is a clear example of why it is generally constructive for agencies to seek public comment before publishing major policy issuances,” Hill said. “At a minimum, [I] believe it would be helpful to clarify that SAB 121 does not apply to the wider universe of tokenized assets beyond blockchain-native assets.”