#FDIC Restricts Banks from Using Ethereum#

The Federal Deposit Insurance Corporation (FDIC) is cautious about banks using public blockchains like Ethereum, requiring them to undergo more stringent scrutiny before adopting them. This news stems from a trove of unredacted crypto-related communications between the FDIC and its member banks obtained by Coinbase through a Freedom of Information Act request. The documents reveal that the FDIC is concerned about the decentralized and transparent nature of public blockchains, believing they could pose risks to bank security and stability. The FDIC argues that the complete openness and lack of third-party control over activities on public blockchains clash with traditional banking operations. In contrast, the FDIC favors banks using private permissioned networks, as these networks can control participants and transactions, offering greater security. Consequently, the FDIC mandates that banks must undergo a new, detailed review process before launching any products on public blockchains. It has also instructed member banks to cease implementing services related to buying and selling Bitcoin, even demanding that some banks "pause all activities related to crypto assets." This move indicates the FDIC's cautious stance towards cryptocurrencies and blockchain technology, highlighting its desire for deeper evaluation and regulation before banks utilize these technologies.