Regulation

FDIC Nominee Says Banks Free to Serve Digital Asset Firms

Published

2 months ago

July 13, 2024

While testifying before the Senate Banking Committee as an FDIC nominee, Christy Goldsmith Romero said that the FDIC should not prescribe who banks can and cannot do business with. This was in response to a question from Senator Cynthia Lummis whether banks should be allowed to provide services to digital asset companies.

FDIC Says Banks Free to Serve Digital Asset

President Biden nominated Christy Goldsmith Romero, an attorney, and a Democrat serving on the Commodity Futures Trading Commission to the FDIC chairmanship. She is expected to take over the position from Martin Gruenberg who is resigning from the agency in light of current and former employees’ misconduct.

🚨This is HUGE 🚨
CL: “Should banks be able to provide services to digital asset companies like payment services?”
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CGR: “Yeah, I don’t think it’s the FDIC’s role to tell banks what industries or companies they should be providing services to.”

Watch the full clip below⬇️⬇️⬇️ pic.twitter.com/NicfAz1VCr
— Senator Cynthia Lummis (@SenLummis) July 13, 2024

In the hearing, the Republican Senators criticized Goldsmith Romero for lack of experience in bank supervision and policymaking. But she stood her ground and said that she was ready to obtain more feedback on the planned increases in bank capital, which is an issue dividing banks.

Goldsmith Romero’s comments following Senator Lummis’ question on banks that engage with digital asset companies suggest a possible transition towards a less restrictive regulatory framework for the digital assets industry. She said,

“I don’t think it is the FDIC’s place to dictate to the banks which industries or companies they should do business with.”

Banks to Exclude Crypto Holdings

As reported by Coingape, the SEC has adopted measures that enable banks and brokerages to exclude crypto assets from their balance sheets while managing the related risks. This development occurs as the SEC’s guidance on accounting for crypto assets, SAB 121, is under scrutiny on what companies holding crypto assets on behalf of customers are required to do.

The SEC’s decision provides a new direction for financial institutions on how to address crypto assets without the rigidity of SAB 121.

As a source close to the issue indicates, banks and brokerages have sought legal advice from the SEC, proving that their operations are not similar to the ones described in SAB 121. Consequently, some institutions have been granted exemptions from these rules in order to safeguard customers’ property at times of financial difficulty.

In May, the FDIC Vice Chairman Travis Hill called for the SEC to offer better guidance on regulation of the sector. Hill accused the SEC of overreaching by defining “crypto-assets” too broadly, including blockchain-based assets and tokenized versions of real-world assets.