Last Thursday, the Biden administration tapped Christy Goldsmith Romero, most recently a commissioner at the Commodity Futures Trading Commission (CFTC), to be the new head of the Federal Deposit Insurance Corporation (FDIC). 

As head of one of the main banking regulators, the new chair could alleviate the crypto industry’s woes with banking in the United States, which worsened after the collapse of FTX when it seemed banking regulators were aiming to cut the crypto industry off from the banking system in a so-called “Operation Choke Point 2.0.”

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With the emergence of crypto as an election issue and presidential candidate Donald Trump making overt appeals to crypto enthusiasts, the crypto industry’s anger at Democrats has prompted a number of Democratic members of Congress to pivot toward pro-crypto votes and stances. However, President Joe Biden’s administration has not done so, making the nomination of a new FDIC chair an opportunity for an overture. 

But the choice of Goldsmith Romero is not that. Her past remarks and actions on crypto at the CFTC indicate she might take a hard line on the industry. This could mean banks looking to offer crypto services and products may continue to be shut out and even the bank accounts of crypto firms themselves could be shut off. 

“[O]ne word should guide the federal government’s approach to crypto. That word is ‘risk,’” she said in a 2022 speech before the International Swaps and Derivatives Association’s Crypto Forum, in which she underlined her skepticism of any crossover of crypto into traditional banking. Elsewhere in the speech, she expressed concern about traditional finance looking to integrate crypto, the danger of pension funds looking to invest in crypto, and the anonymity that lends itself to dangers of illicit finance. 

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Considerations Beyond Crypto

Goldsmith Romero’s position on crypto likely was not even a factor in her nomination. The administration has been pressured by Republicans and Democrats to quickly replace the current FDIC Chair Martin Gruenberg to revamp a longstanding toxic workplace. Biden’s pick of Goldsmith Romero appears to be based on her ability to competently fulfill the role of Chair of the FDIC, plus reset the culture at the nation’s banking regulator. 

Goldsmith Romero has an extensive track record at the SEC, Treasury and now at the CFTC of dealing with bad actors from the Global Financial Crisis in her role as an Inspector General of TARP, making her an all-star, fully qualified pick by Biden for Chair of the FDIC.

“Christy Goldsmith Romero is a proven tough reformer with over 20 years of experience as a respected administrator, manager, and financial regulator,” said Sam Michel, White House acting deputy press secretary, to Unchained. “She has served in Democratic and Republican administrations and was unanimously confirmed twice before. She is a highly qualified nominee and we urge the Senate to quickly confirm her.” 

Familiar With Blockchain Technology, But Not a Fan

Goldsmith Romero is no stranger to crypto, having taught a course on cryptocurrency regulation at the University of Virginia School of Law as an adjunct professor of cryptocurrency for almost two years. Goldsmith Romero also taught a course at the Georgetown University Law Center focused on securities regulation. However, some of her actions and comments about crypto in her current role at the CFTC portray her as a crypto skeptic. 

In December 2023, the CFTC voted in favor of granting Bitnomial a license. Bitnomial was a four-year old company seeking to offer margined bitcoin futures as well as options tied to bitcoin futures to US investors. Goldsmith Romero was the CFTC’s sole dissenting vote, arguing the risks of a vertical integration of crypto with traditional broker dealer licenses was too risky. 

Goldsmith Romero sponsored a Technology Advisory Committee (TAC) at the CFTC that helped develop a thorough report on DeFi. When, in January 2024, the TAC released a report on DeFi, she said in a statement, “I hope that this report can serve as a first step to facilitate a dialogue between policymakers and industry particularly because DeFi remains at the center of illicit finance risks, cyber hacks and theft.” 

When asked about the perception that Goldsmith Romero may take a hard line on crypto, Carole House, Chair of the TAC, who worked directly with her on the report, told Unchained, “Christy has not shied away from the challenges and opportunities presented by emerging tech. In reconstituting the CFTC Technology Advisory Committee, she embraced market, academic, and regulatory expertise to understand emerging technologies we reported on like DeFi and AI, and has supported balanced approaches to leverage the promise of but also mitigate critical risks to drive competitiveness and security in responsible innovation.” 

Upcoming Crypto Issues at FDIC 

The FDIC chair has responsibilities that include insuring bank deposits and examining and supervising financial institutions for safety, soundness, and consumer protection. The chair has significant influence over the degree to which banks may engage in permissible activities such as crypto custody, buying or selling crypto, or using stablecoins for payments. Additionally, the chair can influence whether financial institutions can offer banking services to crypto firms. 

In addition to ending Operation Choke Point 2.0, the chair of the FDIC could also address a recent point of contention: the SEC’s Statement of Accounting Bulletin (SAB 121), which essentially makes it impossible for banks to custody crypto. Goldsmith Romero provided some insight in her 2022 speech on crypto stating, “A financial institution’s assessment of risk should take into account traditional risks as well as novel risks that apply to crypto assets.” This means she may require banks to hold more capital to conduct activities involving crypto, which could result in the same outcome as SAB 121 where financial institutions simply avoid those lines of business.

Senate Banking Committee Chairman Sherrod Brown (D-OH) promises fast action on the nomination of Romero, although no date for the hearing has been set.