US Watchdog Urges FDIC to Strengthen Crypto and Blockchain Oversight Coordination

The US Government Accountability Office (GAO) has called on the Federal Deposit Insurance Corporation (FDIC) to improve coordination with other federal regulators to better manage risks linked to blockchain technology and digital assets.

In a letter made public on June 16, addressed to FDIC Chairman Travis Hill, the GAO said US regulators currently lack an “ongoing coordination mechanism for addressing blockchain risks.” The agency warned that this gap makes it harder to respond effectively to rapidly growing blockchain-based financial products.

The GAO has previously placed blockchain technology on its High Risk List, highlighting concerns that oversight of crypto-related financial activity has not kept pace with industry growth.

Rising Stablecoin Regulation and Policy Pressure

The report comes as US lawmakers continue to debate broader crypto regulation. Under the GENIUS Act passed last year, the FDIC has responsibility for overseeing stablecoin issuers operating as subsidiaries of banks it supervises. Additional legislation currently under discussion could further define how federal agencies regulate the wider digital asset market.

The GAO said its 2023 findings showed regulators lacked structured coordination, even as blockchain-related services expanded significantly across financial markets.

Calls for Stronger Banking Supervision Practices

Beyond crypto coordination, the GAO also recommended changes in supervisory practices, including rotating FDIC case managers assigned to banks. It argued that lack of rotation could weaken independence and reduce oversight effectiveness.

The report also referenced the 2023 collapse of Silicon Valley Bank, Silvergate Bank, and Signature Bank, all of which had strong exposure to the crypto industry. Their failure during the FTX market fallout raised broader questions about how effectively regulators were monitoring crypto-linked banking risks.

The GAO said improved coordination and stronger supervision tools are necessary as blockchain-based financial systems continue to grow within the US banking sector.