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    FDIC Vice Chair urges more open approach to crypto, slams 'Choke Point-like tactics'

    theblock.co 10/01/2025 - 19:45 PM

    FDIC Vice Chair Calls for Clearer Guidance on Crypto

    Federal Deposit Insurance Corporation Vice Chair Travis Hill emphasized the need for clearer guidance on how banks engage with cryptocurrencies, following criticism that the government is blocking the industry.

    In a speech released on Friday, Hill expressed his anticipation for the FDIC to adopt a more “open-minded approach” to technology and digital assets. He is expected to take on the role of acting chair of the FDIC and previously served as its second-in-command after being nominated as a Republican in 2022.

    Hill’s comments were prompted by concerns from the crypto sector that the FDIC urged financial institutions to pause their crypto-related activities. In June, Coinbase filed a lawsuit against the FDIC via consultancy History Associates Inc., accusing the agency of efforts to isolate the crypto industry from the banking sector while also seeking the FDIC’s “pause letters.”

    A report from the FDIC’s Office of Inspector General indicated that the agency began distributing “pause letters” to some banks between March 2022 and May 2023, which stalled their crypto-related work while requesting more information.

    Hill pointed out that federal agencies have shifted to a case-by-case method of engagement rather than providing explicit guidelines on banking with digital assets. “This method has hindered innovation and led to a perception that the FDIC is unwelcoming towards blockchain and distributed ledger technology,” he noted.

    He also mentioned “Operation Choke Point,” likening current tactics to the original initiative from the DOJ in 2013, which aimed to restrict banking services for high-risk industries like payday lenders and firearm dealers.

    “To improve our digital asset approach and eliminate Choke Point-like tactics, it is crucial for regulators to reassess how the Bank Secrecy Act (BSA) is enforced,” Hill commented. He acknowledged the shared goal of preventing financial abuse but criticized the current BSA framework for incentivizing banks to close accounts due to fears of hefty fines for noncompliance.

    Despite concerns, the FDIC maintains that it does not inhibit banks from working with cryptocurrencies. The 2024 Risk Review report clarifies that banking organizations are neither prohibited nor discouraged from servicing any specific customer type.

    Previously, Hill criticized the SEC regarding controversial guidance on crypto accounting known as Staff Accounting Bulletin 121. This bulletin, issued in March 2022, requires firms holding cryptocurrencies to recognize their customers’ holdings as liabilities on their balance sheets, which Hill argued deviates from how custodians usually account for other asset types.




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