WASHINGTON — The Government Accountability Office is urging the Federal Deposit Insurance Corp. to take additional steps to strengthen supervisory independence and improve its response to emerging blockchain-related risks, according to a report highlighting the agency’s priority open recommendations.
In a May 2025 letter to the FDIC, GAO identified examiner rotation and coordination on blockchain-related risks as among the agency’s most significant unresolved issues, saying action could improve bank oversight and help modernize financial regulation.
Among the recommendations, GAO called on the FDIC to require periodic rotation of certain large-bank case managers, arguing the practice could reduce the risk of overly close relationships developing between examiners and the institutions they supervise.
What 2024 Review Found
The recommendation stems from a November 2024 GAO review of banking supervision following the failures of several regional banks. In that report, GAO noted that unlike other federal banking regulators, the FDIC does not require large-bank case managers to rotate after serving a certain period at one institution.
“Implementing rotation requirements could limit close relationships between FDIC large bank case managers and bank management, helping ensure large bank case managers maintain their supervisory independence,” GAO said.
GAO has previously identified regulatory capture — a situation in which regulators act more in the interests of regulated entities than the public — as a potential supervisory risk and has recommended measures designed to strengthen examiner independence.
Recommendation on Blockchain
The watchdog agency also renewed a recommendation related to blockchain and digital-asset oversight.
GAO said federal financial regulators, including the FDIC, have not fully implemented a formal coordination mechanism for identifying and responding to risks posed by blockchain-related products and services. According to the watchdog, regulators identified potential financial stability concerns involving stablecoins in 2019 but did not formally identify the need for regulatory action until late 2021.
GAO recommended that the FDIC work with the Consumer Financial Protection Bureau, Commodity Futures Trading Commission, Federal Reserve, National Credit Union Administration, Office of the Comptroller of the Currency and Securities and Exchange Commission to establish or adapt a formal process for identifying cross-jurisdictional blockchain risks and responding to them within agreed-upon time frames.
Specific Procedures Urged
The agency said regulators should continue developing specific procedures for responding to blockchain-related risks and challenges that cross regulatory boundaries, including establishing timelines for action. Such a framework would help regulators collectively identify risks and develop timely regulatory responses, according to the report.
GAO has argued that a formal coordination mechanism could improve protections for consumers and investors, mitigate illicit-finance and financial-stability risks, and promote responsible innovation as blockchain-based financial products become more widely used.
The recommendations come as the FDIC has been reevaluating its approach to crypto- and blockchain-related activities. In 2025, the agency rescinded prior guidance that required FDIC-supervised institutions to obtain advance approval before engaging in certain crypto-related activities and has indicated it plans to issue additional guidance in coordination with other banking regulators.
As of April 2025, GAO reported the FDIC had 10 open recommendations outstanding and an overall recommendation implementation rate of 80%.
