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Travis Hill, Vice Chairman of the Federal Deposit Insurance Corporation (FDIC), has emphasized the need for a “new direction” in the agency’s approach to cryptocurrency. In a recent speech, Hill expressed concerns about the regulator’s handling of crypto-related banking and hinted at potential changes later this month.
Hill addressed the controversy surrounding “pause” letters sent to over 20 banks, asking them to halt business with crypto firms. These actions were revealed through a Freedom of Information Act (FOIA) request submitted by Coinbase, a leading digital asset exchange. Coinbase’s Chief Legal Officer, Paul Grewal, described the findings as evidence of a “coordinated effort” to stifle crypto activity in the U.S.
Hill criticized the FDIC’s lack of clarity and transparency in regulating crypto activities. He stated, “I continue to think a much better approach would have been – and remains – for the agencies to clearly and transparently describe for the public what activities are legally permissible and how to conduct them in accordance with safety and soundness standards.”
The Vice Chairman also highlighted delays in regulatory approvals for crypto-related businesses, which he believes hinder progress.
A significant part of Hill’s speech focused on the issue of “debanking,” where banks allegedly shut down accounts of crypto firms without explanation. High-profile figures in the crypto industry have reported losing access to banking services, which Hill finds troubling.
He drew parallels between the crypto sector’s experiences and historical cases of debanking affecting politically or socially marginalized groups. “Over the past few years, there have been various accounts of individuals and businesses associated with the crypto industry losing access to bank accounts without explanation,” Hill said, referencing similar issues during the controversial “Operation Choke Point.”
Hill argued that access to banking services is essential in a modern economy, calling for a foundational shift in how financial regulators address these issues.