Incumbent FDIC Chairman Martin Gruenberg’s framework for assessing the known serious risks and speculative benefits of crypto and digital assets strikes the right balance

WASHINGTON, DCDennis Kelleher, President and CEO of Better Markets, made this statement following presentations by FDIC Acting Chairman Martin Gruenberg at an event today at the Brookings Institution entitled “Regulating digital assets: The prudential perspective”:

“As crypto and other digital assets proliferate along with promoters’ claims, they will meet many of society’s most pressing needs, and regulators and policymakers face numerous, daunting challenges in relation to the many novel and complex risks they pose . You need to determine which innovation claims have merit and social value or purpose; how to ban or best regulate them; and how to enforce existing laws to protect investors, consumers, markets and financial stability. All of this must be done while the benefits of crypto and digital assets, if any, are unknown and speculative, but the downsides are clear: millions of Americans are being ripped off, losing billions, if not trillions, of dollars in a burgeoning industry where Lawlessness and crime is far too rampant.

“Federal Deposit Insurance Corporation (‘FDIC’) Acting Chairman Martin Gruenberg approached these intricate, interconnected challenges with an analytical framework that strikes the right balance to most likely realize the real-world benefits while acknowledging the known downsides minimize. Its measured, thoughtful, considered and data-driven approach has five key signposts: “Accessibility, Convenience, Efficiency, Safety and Solidity, and Consumer Protection.” This approach enables the identification, understanding and assessment of the merits, if any, of digital asset-related activities, as well as the destabilizing risks and multiple consumer protection issues. This and the requirement for regulatory approval of crypto activities at banks is the right approach and is in line with other regulators, Federal Reserve Vice Chairman for Oversight Barr and Acting Comptroller for the currency Michael Hsu.

“So far, regulators are to be commended for successfully protecting the banking sector, the traditional financial system, and taxpayers from the $2 trillion crypto asset collapse and the crypto carnage it caused. While this resulted in massive losses for investors, failed crypto companies, and so-called stablecoins proving they are indeed unstable coins, there was no systemic instability or taxpayer bailouts. Acting Chair Grünberg’s balanced, methodical approach, centered on protecting investors, consumers, markets and financial stability, will most likely ensure that the banking sector and taxpayers remain protected, while still benefiting from genuine innovation with a proven social impact have value.”

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Better Markets is a nonprofit, nonpartisan, independent organization founded to advance public interest in financial markets, support Wall Street financial reform, and make our financial system work again for all Americans. Better Markets works with allies – including many in the financial community – to promote pro-market, pro-business, and pro-growth policies that help build a stronger, more secure financial system that protects and nurtures Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.