- The U.S. Government Accountability Office urged the FDIC to coordinate with other agencies to tackle blockchain technology risks.
- GAO placed blockchain oversight on its “High Risk List” due to regulatory struggles with crypto-linked financial products.
- The watchdog also recommended the FDIC rotate bank case managers to safeguard supervisory independence.
- The 2023 collapse of crypto-exposed banks like Silicon Valley Bank raised questions about regulatory effectiveness.
The U.S. Government Accountability Office publicly pressed the Federal Deposit Insurance Corporation on Monday to urgently coordinate with other federal regulators on blockchain-related financial risks. This formal push, detailed in a June 8 letter to FDIC Chairman Travis Hill, underscores mounting governmental concern over the rapidly evolving sector.
GAO had first flagged this as a priority recommendation in May 2023. Consequently, it has now placed blockchain oversight on its official “High Risk List” due to perceived regulatory gaps.
The office stated that financial watchdogs “lacked an ongoing coordination mechanism for addressing blockchain risks.” Meanwhile, “blockchain-related financial products and services have grown substantially,” according to their findings.
Establishing a formal inter-agency mechanism would help collectively identify emerging threats. It would also enable a more timely regulatory response to protect U.S. markets.
Separately, GAO urged the FDIC to implement a rotation policy for bank supervisors. It argued that not requiring case managers to rotate “could compromise their independence and interfere with supervision outcomes.”
This recommendation follows the dramatic failure of several crypto-linked banks in March 2023. Notably, the collapse of Silicon Valley Bank, Silvergate Bank, and Signature Bank “raised questions” about supervisory rigor.
The FDIC holds specific new authority under the recently passed GENIUS Act. This law designates it as the main regulator for bank-affiliated stablecoin issuers.
Meanwhile, Senate lawmakers are working on broader legislation for the crypto market. Their goal is to clearly outline federal agencies’ regulatory roles across the digital asset ecosystem.
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