The U.S. Government Accountability Office (GAO) has issued a call for the Federal Deposit Insurance Corporation (FDIC) to strengthen its coordination with other federal agencies in managing r
The U.S. Government Accountability Office (GAO) has issued a call for the Federal Deposit Insurance Corporation (FDIC) to strengthen its coordination with other federal agencies in managing risks associated with blockchain technology. In a letter dated June 8 and released to the public on Monday, the GAO emphasized that this recommendation had first been presented to regulators as a priority a year earlier, in May 2023.
The GAO has now placed blockchain technology on its official “High Risk List,” a designation reserved for domains facing substantial oversight, cost, or management challenges within federal agencies. According to the GAO’s recent analysis, regulators are struggling to supervise blockchain-based financial products, raising concerns about gaps in managing risks these products could pose to U.S. markets. As an independent agency overseeing federal operations on behalf of Congress, the GAO monitors risk exposure across public institutions.
Mini glossary: The High Risk List is the GAO’s official federal monitoring framework for areas with serious vulnerabilities, costs, or oversight deficiencies. Topics on this list require improved interagency coordination and stronger supervision.
The GAO’s letter points out that an investigation in 2023 found financial regulators lacked a consistent interagency coordination mechanism for addressing blockchain-related risks. At the same time, the rapid expansion of blockchain-linked financial products and services has made regulatory fragmentation more visible, exposing oversight shortcomings.
GAO officials highlighted that creating a formal mechanism would enable the FDIC and other regulators to identify risks collectively and develop timely regulatory responses.
Citing the GENIUS Act, the GAO notes that the FDIC is the primary regulatory body for stablecoin issuers operating as subsidiaries of banks under its supervision. Meanwhile, lawmakers in the U.S. Senate are working on a new legislative proposal that would clarify how the broader crypto market falls under federal oversight.
Against this background, the GAO is urging the FDIC to move away from a narrow oversight approach limited to select institutions and instead deepen its information sharing and joint risk assessments with other financial regulators. The letter underscores that blockchain-based financial products are now increasingly intertwined with the banking system.
GAO officials further advised the FDIC to introduce mandatory rotation policies for case managers and supervisory personnel assigned to banks. Their 2024 review revealed that the FDIC does not currently require bank examiners to rotate regularly, a gap that could undermine independence and affect the reliability of supervisory outcomes.
The GAO believes that mandatory rotation could reduce threats to supervisory independence and contribute to a more robust regulatory process.
In its letter, the GAO also referenced the bankruptcies of multiple banks associated with the crypto and tech sectors in 2023. The agency questioned whether regulators had taken adequate and timely action to address supervisory warnings flagged during oversight of those banks.
Silicon Valley Bank, Silvergate Bank, and Signature Bank were each linked to the crypto industry, and they collapsed in quick succession in March 2023, just months after the FTX implosion. These failures triggered sharp declines across global crypto markets and intensified scrutiny of regulators’ preparedness for disruptive events within the digital assets sector.
The GAO’s latest warning has reignited debates about how institutions monitor blockchain-related financial risks and has drawn renewed attention to independence and coordination shortcomings across the federal banking supervisory system.
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