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A top official at the US Federal Deposit Insurance Corporation (FDIC) has said banks are likely to be given more freedom to experiment with emerging payments technologies under the incoming Trump administration.
Travis Hill, who was appointed vice chair of the FDIC in 2021, has signalled that the agency will take a more “open-minded” approach to innovation and technology under President Trump.
“There is a healthy balance between allowing banks to evolve with the times and ensuring that they continue to manage risks prudently,” he said, “and in recent years, the FDIC has done a poor job striking that balance.”
In a speech on “charting a new course” in FDIC policy, Hill said he hopes that FDiTech, a Trump-era innovation lab, will be “reinvigorated” under the new administration.
Previously, FDiTech had engaged directly with the private sector, helping the FDIC to understand the challenges banks face with technology adoption and to develop solutions.
While the FDIC’s current leadership has “abandoned” this model, Hill said he expects it to return once Trump takes office.
With regard to specific emerging technologies, he also said the FDIC should consider issuing additional guidance on bank-fintech partnerships, artificial intelligence (AI), digital assets and tokenisation.
On digital assets, he said the FDIC “sorely needs” a “reset” of its current approach to the sector.
He acknowledged, for example, the damage caused by the FDIC’s sending of letters to more than 20 banks during 2022, asking them to “pause” “all crypto-related activity”.
“This approach has stifled innovation and contributed to a public perception that the FDIC is closed for business if institutions are interested in anything related to blockchain or distributed ledger technology,” he said.
“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.
“And if regulatory approvals are needed, those must be acted upon in a timely way, which has not been the case in recent years.”
