FDIC Vice Chairman Denounces ‘Choke Point-Like’ Tactics

FDIC Vice Chairman Denounces ‘Choke Point-Like’ Tactics

In a speech titled “Charting a New Course,” FDIC Vice Chairman Travis Hill condemned the agency’s alleged “Choke Point-like tactics” and urged the organization to embrace a fresh approach to digital assets.

Did the FDIC Just Confess to Crypto Debanking?

Hill’s remarks follow the FDIC’s reluctant disclosure of confidential letters sent to banks engaged in crypto-related activities. The release was compelled by a June 2024 court order obtained by Coinbase after the agency denied its Freedom of Information Act (FOIA) request. These letters reportedly directed banks to halt their crypto projects.

The FDIC has faced controversies, including allegations of workplace misconduct that led to Chairman Martin Gruenberg’s resignation last November. Among the most prominent issues is the alleged targeted debanking of the cryptocurrency industry.

A Call for Change

Hill, a Republican appointee and rumored top pick for FDIC leadership under Donald Trump, emphasized the need for change within the agency. He stated:

“In ten days, there will be a change in leadership at the FDIC. The agency needs a new direction. Adopting a new approach to digital assets and putting an end to any and all Choke Point-like tactics are essential first steps.”

Hill criticized the agency’s bank supervision practices and pointed to the collapse of Silicon Valley Bank (SVB), which had clients such as Circle, the issuer of the USDC stablecoin. He argued that most criticisms against SVB were unrelated to financial risks, focusing instead on the bank’s financial modeling rather than its actual balance sheet.

Embracing Innovation

Hill advocated for a more open-minded approach to innovative technologies and suggested hiring tech-savvy staff. He highlighted the FDIC’s apparent shift in crypto policy, moving away from the 2021 roadmap after Gruenberg’s return as chairman in 2022. Hill remarked:

“There have been various accounts of individuals and businesses associated with the crypto industry losing access to bank accounts without explanation. There is no place at the FDIC for anyone who has pushed – explicitly or implicitly – banks to stop serving law-abiding customers.”

Beyond Crypto

Hill’s speech also touched on other topics, such as avoiding climate change-related politics and reassessing banking capital requirements. However, his primary focus remained on ending discriminatory practices against the crypto industry.

He concluded:

“Efforts to debank law-abiding customers are unacceptable. Regulators must work to end it.”