The US FDIC does not encourage member banks to use public blockchains such as Ethereum

According to Decrypt, based on uncensored documents obtained by Coinbase, Bank of America attempted to provide customers with services based on public blockchain networks, but appeared to be discouraged by the Federal Deposit Insurance Corporation. This disclosure stems from a large amount of uncensored encrypted communications between the FDIC and member banks. Coinbase, a cryptocurrency exchange based in San Francisco, obtained these documents through the Freedom of Information Act (FOIA). Last month, Coinbase obtained a large number of abridged versions of 23 such letters. Due to the court order, the contents of these letters (as well as two new letters) were (almost) fully disclosed today. One of the letters was sent by the FDIC New York office to a member bank in March 2022, detailing how the federal agency learned of the bank's plan to launch a "bank digital deposit" program running on a public blockchain. The name of this public blockchain has not yet been made public. In the letter, the FDIC seems to express dissatisfaction with banks choosing to use public blockchain instead of private licensed networks. Blockchains such as Ethereum and Solana are decentralized and permissionless, which means their activities are completely public and cannot be overridden by third-party human administrators. In contrast, private blockchain networks, such as those used by nation states to issue central bank digital currencies, impose restrictions on who can use them and for what purposes. The FDIC clearly does not approve of member banks launching products on a universal and fully transparent network. The regulatory agency instructed in a letter in March 2022 that New York banks must undergo a new detailed review process before launching any products on the public blockchain. Other disclosed letters indicate that the FDIC has ordered member banks to cease implementing services related to Bitcoin buying and selling. The unedited portion of the same letter from last month showed that the FDIC instructed member banks to 'suspend all activities related to cryptocurrency assets'.