FDIC Releases Documents Related to Supervision of Crypto-Related Activities

The Federal Deposit Insurance Corporation has released 175 documents related to its supervision of banks that engage in, or seek to engage in, crypto-related activities.

The agency is “actively reevaluating” its supervisory approach to crypto-related activities, the new acting chairman of the FDIC, Travis Hill, said in a statement.

Specifically, it is looking to replace guidance it issued in 2022, requiring banks to inform the regulator about their crypto-related activities on the grounds that these activities “may pose significant safety and soundness risks, as well as financial stability and consumer protection concerns.”

Travis Hill was appointed acting chairman of the FDIC last month and is known to want a more open regulatory approach to crypto activities.

Hill issued the following statement in connection with the latest release of documents:

“Upon becoming Acting Chairman, I directed staff to conduct a comprehensive review of all supervisory communications with banks that sought to offer crypto-related products or services. While this review remains underway, we are releasing a large batch of documents today, in advance of a court-ordered deadline of Friday. Our decision to release these documents reflects a commitment to enhance transparency.

“Previously, the FDIC released 25 ‘pause’ letters sent to 24 institutions interested in pursuing crypto- or blockchain-related activities. The documents released today include (1) additional correspondence with those 24 institutions and (2) correspondence with additional institutions beyond those 24. The documents that we are releasing today show that requests from these banks were almost universally met with resistance, ranging from repeated requests for further information, to multi-month periods of silence as institutions waited for responses, to directives from supervisors to pause, suspend, or refrain from expanding all crypto- or blockchain-related activity.

“Both individually and collectively, these and other actions sent the message to banks that it would be extraordinarily difficult — if not impossible — to move forward. As a result, the vast majority of banks simply stopped trying.

“Looking forward, we are actively reevaluating our supervisory approach to crypto-related activities. This includes replacing Financial Institution Letter (FIL) 16-2022 and providing a pathway for institutions to engage in crypto- and blockchain-related activities while still adhering to safety and soundness principles. The FDIC also looks forward to engaging with the President’s Working Group on Digital Asset Markets established by the President’s January 23, 2025 Executive Order.”

Along with revising its approach to the crypto sector, the FDIC has also signalled it will undertake a comprehensive review to ensure that its rules “promote a vibrant, growing economy,” including changes to capital and liquidity rules to favor growth; revising the approval process for bank mergers; and, withdrawing contentious regulatory proposals in areas such as corporate governance and brokered deposits.

A link to the FDIC’s FOIA Reading Room is available here.