FDIC Head Conceded That Payment Stablecoins Merit Further Consideration

The acting head of the Federal Deposit Insurance Corporation (FDIC), a bank regulator in the United States, has called for stricter regulations on stablecoin issuance. Notably, the bank regulator proposes restricting stablecoins to permissioned blockchains.

FDIC Acting Chair Martin Gruenberg said in remarks prepared for a speech at the Brookings Institution, a Washington-based thinktank:

“Payment stablecoins would be safer if they were transacted on permissioned ledger systems with a robust governance and compliance mechanisms.

The ability to know all the parties – including nodes and validators – that are engaging in payment stablecoin activities is critical to ensuring compliance with anti-money laundering and countering the financing of terrorism regulations, and deterring sanction evasion. Innovation can be a double-edged sword.”

The concept of validators and nodes being subject to know-your-customer laws may face substantial opposition from numerous firms and projects in the digital asset market.

Senior US authorities have also stated that stablecoins are similar to money market funds, which are securities investments, which Gruenberg agreed with.

The acting FDIC chair also warned that comments deceiving customers about the existence of federal deposit protection for a specific crypto-asset product are illegal, a concern that the FDIC has raised with some of the industry’s largest names.

“We will continue to work with our supervised banks to ensure that any crypto-asset-related activities that they engage in are permissible banking activities that can be conducted in a safe and sound manner and in compliance with existing laws and regulations,” he added. 

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