#FDIC Restricts Banks from Using Ethereum#

The Federal Deposit Insurance Corporation (FDIC) appears to be cautious about banks using public blockchains like Ethereum, requiring banks to undergo more stringent scrutiny before using them. According to documents obtained by Coinbase through a Freedom of Information Act request, the FDIC sent a letter to a member bank in March 2022 expressing concerns about the bank's plan to launch a "bank digital deposit" program on a public blockchain. The FDIC seems to favor banks using private permissioned networks over public blockchains, as the decentralized and transparent nature of public blockchains could pose regulatory risks. The FDIC believes that the complete public visibility of activities on public blockchains, which cannot be overridden by third-party human administrators, could lead to security and privacy issues for banks. Additionally, the FDIC has requested member banks to cease implementing services related to buying and selling Bitcoin and has instructed member banks to "suspend all activities related to crypto assets." These actions suggest that the FDIC is cautious about banks using crypto assets and public blockchain technology and wants to conduct more thorough review and regulation before banks utilize these technologies.