US digital assets industry braces for sweeping changes under new FDIC chief

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United States President Joe Biden has announced Martin Gruenberg as his pick to hold the reins of the Federal Deposit Insurance Corporation (FDIC) for a five-year term.

Biden’s nomination comes after Gruenberg took the role of Acting Chair of the FDIC in February. Gruenberg has also served in an acting capacity of the FDIC between 2005-2006, and 2011-2012, making him versed in the duties of his role as head of the agency.

“Today, President Joe Biden announced his intention to nominate Martin Gruenberg to serve as Chair and Member of the Board of Directors of the Federal Deposit Insurance Corporation,” read the White House press release.

Gruenberg will take over from Jelena McWilliams upon her resignation, but his appointment remains subject to confirmation by the Senate. However, pundits believe that his confirmation might face some congressional hurdles, given the outcome of the midterm elections, if the Republicans gain control of the Senate.

Gruenberg has maintained a firm stance towards digital assets in his previous stints as Acting Chair of the FDIC. Earlier this year, he disclosed that the FDIC would explore the risks associated with virtual currencies and strive to protect investors from risky activities.

“To the extent such activities can be conducted in a safe and sound manner, the agencies will need to provide robust guidance to the banking industry on the management of prudential and consumer protection risks raised by crypto-asset activities,” Gruenberg said.

Keeping to his word, Gruenberg’s FDIC issued cease-and-desist letters to firms, including FTX US, for making false statements about the deposit insurance linked to digital assets. The nominee will appear before the Senate Banking Committee and the House Financial Services Committee for his testimony.

Appointments may make or break the industry

The virtual currency industry has always keenly followed the appointment of the heads of regulatory agencies, given their vast powers to shape the industry’s future. Following the appointment of Gary Gensler as Securities and Exchange Commission (SEC) Chair, the sector might celebrate the win of future-based digital currency Exchange Traded Funds (ETFs) but has to contend with the designation of several digital assets as securities.

Biden nominated Saule Omarova to head the Office of the Comptroller of the Currency, but after widespread criticisms from Republicans, moderate Democrats, and stakeholders in the industry, she withdrew her nomination.

Watch: The BSV Global Blockchain Convention panel, Law & Order: Regulatory Compliance for Blockchain & Digital Assets