Martin Gruenberg, the acting head of the Federal Deposit Insurance Commission (FDIC) has assured that banking regulators in the United States will be responsible for providing adequate guidelines to financial institutions on how to deal with digital currencies.

Speech At the Brookings Institution on Thursday, Gruenberg said this guidance will only come when regulators have gained a proper understanding of the risks associated with this nascent and volatile asset class.

“We must understand and assess the risks associated with these activities in the same way that we would assess the risks associated with any other new activity,” said Martin Gruenberg.

Gruenberg is not ruling out the potential of digital currencies and envisions a scenario in which assets such as stablecoins can be adapted to complement the Federal Reserve’s upcoming FedNow service. Additionally, Gruenberg hinted that stablecoins can also complement the Digital Dollar, the United States proposed. Central bank digital currency (CBDC) when it finally decides to launch one.

However, in his warning, the Acting FDIC Chairman said that stablecoins that are designed for payments will be more secure if they are hosted on permissioned blockchains with strong governance and compliance mechanisms.

“A public, permissionless blockchain… poses huge challenges in terms of basic oversight responsibilities for safety and soundness, consumer protection, and anti-money laundering,” Gruenberg said.

Over the years, the FDIC has played a more subtle role in regulating some virtual asset service providers (VASPs) whose business models resemble banking services. In one of these movements, the regulator issued a cease and desist order against now-embattled crypto lending firm Voyager Digital, as well as a warning to FTX US for presenting its products to its customers as if they were FDIC insured.

In general, the FDIC has kept that any form of deposit made in non-bank institutions is not insured by the government and that investors cannot access any form of protection in the event of a mishap.

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