GAO Tells FDIC to Step Up Blockchain Risk Coordination

The U.S. Government Accountability Office (GAO) has issued a letter to the Federal Deposit Insurance Corporation (FDIC), urging it to strengthen its coordination with other federal regulators in managing risks associated with blockchain-based financial products.

In a June 8 letter, GAO recommended that the FDIC develop an ongoing mechanism to help agencies identify, assess, and respond to emerging blockchain-related threats more consistently. This recommendation is based on findings from 2023, which showed that regulators lacked a continuous coordination structure while blockchain-related financial services grew significantly.

GAO also pressed the FDIC to revisit how it assigns supervisors to institutions, arguing that changes to case manager rotation could improve supervisory independence and reduce the risk that oversight outcomes are compromised. The agency linked this recommendation to unanswered questions raised by bank failures in 2023, particularly whether bank watchdogs took sufficient action to ensure institutions 'promptly addressed supervisory concerns.'

The emphasis on timeliness is particularly relevant for compliance monitoring: blockchain-linked products can evolve quickly, and regulatory responses often depend on rapid information-sharing across agencies responsible for distinct parts of the financial system.