The US Government Accountability Office (GAO) has urged the Federal Deposit Insurance Corporation (FDIC) to coordinate closely with other federal regulators on blockchain risks.
Summary
- The GAO said regulators still lack a standing process for systematic oversight of blockchain financial risks.
- The FDIC is facing new pressure as the GENIUS Act expands its role over national stablecoin issuers.
- The watchdog also called for a change in post-bank failure managers by 2023 and raised questions of supervision.
The watchdog made its June 8 letter to FDIC Chairman Travis Hill public on June 15.
Meanwhile, the GAO said blockchain-related financial products and services have grown in recent years. It said regulators “have no consistent communication method” of blockchain risks when it reviews the issue in 2023. The office said such a process would help agencies identify hazards and respond quickly.
The FDIC’s role is expanding under the stablecoin rule
The recommendation comes as the FDIC’s crypto role expands under the GENIUS Act. As crypto.news reported in April, the FDIC proposed regulations for stablecoin issuers operating through the banking system. The proposal includes reserves, redemptions, capital, risk management, and maintenance standards.
Under that framework, deposits backing stablecoins may be eligible for deposit insurance if they are held within insured banks. Stablecoin holders will not receive federal deposit protection. That difference keeps the FDIC in the middle of a debate about how banking regulations should apply to token payment products.
In addition, the GAO also urged the FDIC to strengthen bank supervision. It said the 2023 bank failure raised questions about whether regulators acted quickly enough when institutions showed a lack of financial strength and risk management. Silicon Valley Bank, Signature Bank, and Silvergate Bank all became part of the broader debate about the bank’s exposure to crypto and technology clients.
The watchdog also reiterated a recommendation that the FDIC rotate managers of certain cases assigned to banks. It said the agency does not need to be replaced periodically, which could reduce independence and affect oversight results. The GAO said exchange rules may support evidence-based escalation decisions.
The widespread dominance of crypto continues
The GAO letter comes as Congress and federal agencies continue to work on crypto regulations. As previously reported, the Senate Banking Committee advanced the DO NOT UNDERSTAND Act by a vote of 15 to 9 in May. The bill would separate digital assets from all SEC and CFTC oversight and create a separate framework for payment coins.
The FDIC has also changed its approach to banking crypto. By 2025, the agency said banks regulated by the FDIC can engage in permitted crypto-related activity without the agency’s prior approval, if they manage the risks. Travis Hill said the organization is “turning the page” on the past.
Lawmakers questioned stablecoin issuers, bank charter revisions, customer identification rules, and whether crypto companies should face bank-like protections if their products resemble deposits.
For the FDIC, the application now sits alongside stablecoin rulemaking and its bank oversight duties. The GAO did not call for a ban on blockchain products. It called for a standardized process that allows agencies to work together before risks spread across markets.
The book posits crypto oversight as a coordination problem at a time when stablecoins, bank charters, and market-building bills are passing through Washington. The report lists blockchain risk oversight and bank supervision as two areas that need timely attention from the FDIC.
