Donald Trump’s transition team is reporting that it plans to reduce, consolidate or even eliminate key supervisory agencies in the country’s banking sector. Advisors to the newly formed Department of Government Efficiency (DOGE), led by Elon Musk, are considering the possibility of repealing the Federal Deposit Insurance Corporation (FDIC).
Repealing the FDIC is Being Discussed
Following role interviews for the FDIC and the Office of the Federal Reserve Comptroller (OCC), DOGE advisors floated the idea of transferring deposit insurance responsibilities to the Treasury Department. However, such a change would require Congressional approval and could abolish an existing agency, which would be the first time in the history of the U.S. government.
Bank executives are optimistic that President-elect Trump will reverse tougher regulations on capital requirements and consumer protections. However, some market analysts think FDIC-backed deposit insurance is necessary. The OCC has caused serious problems, especially for cryptocurrency companies working with banks. The latest move can be considered in favor of crypto, as the effort to isolate banks from the cryptocurrency space with strict regulations will end.
Crypto Industry Reaction
Trump stated that he has big plans for the crypto market in his speech at the New York Stock Exchange on December 12. In a brief interview with Jim Cramer, Trump said:
“We are going to do something great with crypto because not only China but others are also adopting crypto and we want to be ahead.”
The DOGE team is considering the consolidation of the FDIC, OCC, non-monetary functions of the Federal Reserve, and the National Credit Union Administration (NCUA).
Crypto leaders are demanding the regulators behind Operation Choke Point 2.0 be removed. People like crypto exchange Coinbase CEO Brian Armstrong support the idea of expelling anti-crypto regulators from the Senate Banking Committee.
Additionally, crypto-friendly U.S. Rep. French Hill has been named chairman of the Financial Services Committee and will focus on stablecoins and cryptocurrency regulations.
Former FDIC Chairman Sheila Bair expressed skepticism about removing a bank regulator:
“We can make some simplification in financial regulation. But this is really difficult to achieve. Banks may complain, but in the end they choose to maintain relationships with certain agencies. “They like the status quo.”
Some transition team members propose retaining only one primary banking controller and maintaining the non-regulatory functions of the others. Although these proposals show Donald Trump’s desire to shake up federal oversight, experts say these radical changes will face significant political and industry resistance.
Repealing the Federal Deposit Insurance Corporation could lead to a sweeping reshaping of regulations in the banking industry. Congressional approval will be required to implement such changes, and detailed evaluations are expected to be made in terms of financial stability and intra-sector relations.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
