FDIC Signals Potential Guardrails for Banks Using Public Blockchains

The Federal Deposit Insurance Corporation (FDIC) is considering new guardrails for how banks engage with public, permissionless blockchains, signaling a shift toward a more structured regulatory approach to crypto-related activities.

FDIC Chair Travis Hill said the agency may eventually propose “durable” standards governing bank interactions with public blockchain networks, particularly around know-your-customer (KYC) compliance and customer privacy. Speaking at the DC Blockchain Summit, Hill emphasized that while access to these systems is important for innovation, unresolved risks remain.

The comments follow the FDIC’s 2025 decision to rescind Biden-era guidance that had effectively discouraged banks from engaging with public blockchains. That earlier framework required institutions to notify regulators in advance of crypto-related activities, reflecting broader skepticism among regulators about permissionless systems. Removing that requirement gave banks more flexibility, but also shifted greater responsibility onto them to manage compliance risks.

Hill suggested the next phase of regulation will focus less on restricting activity and more on defining clear expectations. Public blockchains, unlike permissioned systems, allow open participation, making it harder to verify counterparties and transaction flows. That creates challenges for anti-money-laundering compliance, sanctions enforcement, and data privacy, all of which regulators continue to scrutinize.

Lawmakers and regulators across administrations have flagged these risks. Critics argue that the pseudonymous nature of public blockchains can facilitate illicit finance, while industry advocates counter that overly restrictive policies could push innovation offshore.

Looking ahead, the FDIC appears poised to take a middle-ground approach: allowing bank participation in blockchain-based systems but with clearer, standardized compliance requirements. Hill indicated that more formal rulemaking could follow once broader crypto legislation, such as stablecoin frameworks, is finalized.

The result could be a more predictable regulatory environment for banks exploring blockchain use cases, even as core tensions between innovation and risk management remain unresolved.