Trump considering FDIC rebuild, raising crypto industry hopes

The Wall Street Journal reports that new President Donald Trump’s transition team is exploring plans to replace or potentially eliminate the Federal Deposit Insurance Corporation.

Trump advisers have questioned candidates for regulatory positions about the feasibility of merging the FDIC with other agencies or transferring its functions to the Treasury Department, sources told the WSJ.

These discussions are part of broader efforts to scale back federal oversight and streamline financial regulation under Trump’s proposed Government Efficiency Agency.

Talks also include merging or restructuring parts of the FDIC, the Office of the Comptroller of the Currency and the Federal Reserve, according to the WSJ.

These moves would require congressional approval and face political and industrial resistance. Former FDIC Chairman Sheila Bair told the WSJ that banks generally rely on their relationships with certain regulators and would likely oppose disrupting existing frameworks.

Trump’s campaign and vision align with Republican calls to reduce surveillance. The proposed changes are primarily aimed at streamlining regulatory functions and reducing restrictions on financial institutions.

What does this report mean for the crypto industry?

The potential shrinking of the FDIC could be a turning point for the crypto industry. It would reduce federal oversight and accelerate the integration of crypto into mainstream finance. Fewer regulatory bodies could lead to a more harmonious framework for crypto exchanges and blockchain projects.

BREAKING: President-elect Donald Trump is looking to potentially eliminate top bank regulators, including the FDIC, according to the WSJ.

Office of Government Efficiency, @DOGEThe FDIC reportedly asked whether it could be repealed. pic.twitter.com/G4ZPG8vBu9

— Kobeissi Letter (@KobeissiLetter) December 13, 2024

The assumption in a report like this is that Trump’s broader deregulation agenda could create an environment with fewer compliance barriers for the crypto space. As traditional financial institutions face less oversight, the crypto industry may seize the opportunity to fill the gaps in decentralized finance and blockchain-based solutions.

The proposed changes may also affect consumers’ perceptions of financial security. If the public’s trust in traditional banks is shaken by diminishing deposit insurance protections, crypto supporters may highlight blockchain’s transparency and security as viable alternatives.

This could encourage greater adoption of stablecoins and other digital assets as decentralized hedges against banking risks.