GAO Urges FDIC to Strengthen Coordination With Federal Regulators on Blockchain Risks
Summary
- The U.S. Government Accountability Office, or GAO, has placed blockchain technology on its High Risk List and recommended that the FDIC establish a coordination framework with other federal regulators to address those risks.
- The GAO said oversight of financial products and services tied to blockchain remains inadequate even as the sector grows rapidly, and called for a coordination mechanism among regulators to identify risks early and respond in a timely manner.
- The GAO said financial authorities need stronger supervisory capacity, citing stablecoin oversight under the GENIUS Act and the failures of Silicon Valley Bank, Silvergate Bank and Signature Bank, while also recommending a rotation system for bank supervisors.
Forecast Trend Report by Period
The U.S. Government Accountability Office has recommended that the Federal Deposit Insurance Corp. establish a coordination framework with other federal regulators to address risks related to blockchain technology.
Cointelegraph reported June 16 that the GAO recently disclosed a letter to FDIC Acting Chairman Travis Hill saying blockchain technology is emerging as a major risk to the U.S. financial system.
The GAO has included blockchain technology on its High Risk List and said regulators have not yet put in place an adequate supervisory framework for blockchain-based financial products and services.
A 2023 review also found there was no standing body among financial regulators to jointly assess and respond to blockchain-related risks. With blockchain-based financial products and services growing rapidly, the GAO said regulators need a coordination mechanism to identify risks early and prepare timely responses.
The FDIC is currently serving as the primary federal supervisor for bank-affiliated stablecoin issuers under the GENIUS Act, a stablecoin bill enacted last year. Congress is also discussing market structure legislation that would establish a broader regulatory framework for the digital-asset market.
The GAO also called for improvements to bank supervision. The report said examiners assigned to the same banks for long periods could lose their independence and recommended a rotation system for supervisors.
It also cited the 2023 failures of Silicon Valley Bank, Silvergate Bank and Signature Bank, which were linked to the crypto industry, and said questions have been raised over whether regulators responded early enough.
The GAO said debate continues over whether regulators took sufficient steps to ensure banks quickly addressed supervisory problems, and it urged financial authorities to strengthen their oversight capacity.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.
