By The Honorable Rodney E. Hood, Former Acting Comptroller of the Currency and Former FDIC Board Member
As the market expands, banks, policymakers and global regulators must reinforce the principles that underpin safety and soundness, financial integrity and public confidence.
The most consequential question in digital finance today is not whether banks will engage with digital assets. They already are. The question is whether the frameworks governing that engagement will be strong enough to protect the public trust on which the entire banking system depends.
As a former Comptroller of the Currency and member of the FDIC (Federal Deposit Insurance Corporation) Board, I have watched how periods of technological change reveal the characters of financial institutions. They expose the gaps between innovation and governance, between ambition and discipline. In the case of digital assets, what those gaps reveal matters enormously, and the stakes extend well beyond individual institutions to the stability of the financial system as a whole.
The scale of the market makes this more than a theoretical concern. Global digital-asset revenues are projected at roughly 112 billion dollars in 2026, with the United States accounting for approximately 20 billion dollars of that total. Stablecoins, tokenized instruments and other forms of digital finance continue to attract institutional interest and capital. That growth reflects genuine economic demand. It also reflects the urgency of getting the supervisory framework right.
Banking is not built on technology alone. It is built on trust, legal certainty and the expectation that institutions will behave responsibly under stress. As digital assets become more closely integrated with traditional finance, the importance of supervision, governance and clear regulatory expectations only increases.
At a recent international conference in London, I had the opportunity to engage alongside representatives of the Financial Conduct Authority (FCA) on precisely these questions. Regulators and market participants in the United States, the United Kingdom and across Europe are working through a common set of challenges. How do we permit responsible innovation while preserving the safeguards that protect consumers, deter illicit finance and sustain confidence in the banking system? The answer will not be found in isolation. It requires deliberate coordination and a willingness to align expectations where possible.
Regulatory boundaries should not be seen as barriers to innovation. Properly designed, they provide clarity, discipline and confidence.
Regulatory frameworks for digital assets remain uneven across major markets. The European Union (EU) has advanced a comprehensive framework for crypto-assets under its Markets in Crypto-Assets Regulation (MiCA). The United Kingdom is developing its own regime through the Financial Conduct Authority and HM Treasury. In the United States, agencies continue to address digital-asset activity through a combination of existing statutory authorities, interpretive guidance, supervision and enforcement. This diversity of approaches is understandable, reflecting differences in legal traditions, institutional structures and political environments. But it creates real challenges for institutions operating across borders. Inconsistent expectations can produce uncertainty. Gaps between regimes can invite regulatory arbitrage. For that reason, regulatory boundaries should not be seen as barriers to innovation. Properly designed, they provide clarity, discipline and confidence.
Banks’ compliance obligations do not change because the underlying technology changes. The Bank Secrecy Act (BSA), anti-money laundering (AML) rules, know-your-customer (KYC) requirements and sanctions compliance remain foundational. Digital assets do not exempt institutions from these responsibilities. If anything, they make those responsibilities more demanding.
The challenge is largely operational. Decentralized networks, pseudonymous transactions and evolving intermediary relationships can strain legacy compliance models. But the correct response is not to lower standards. It is to apply enduring principles through modern tools. Blockchain analytics, digital identity solutions, transaction-monitoring systems and more effective information sharing can strengthen compliance when properly governed and applied consistently. The Financial Action Task Force (FATF) has established an important framework for virtual assets, including the travel rule, which requires that originator and beneficiary information accompany qualifying transfers. That principle is central to preserving the global financial system’s integrity.
Effective oversight of digital assets requires that these agencies work with shared purpose, clear communication and genuine coordination.
No single agency can manage these responsibilities alone. The OCC (Office of the Comptroller of the Currency), the Federal Reserve (the Fed), the FDIC, the SEC (Securities and Exchange Commission), the CFTC (Commodity Futures Trading Commission) and the FinCEN (Financial Crimes Enforcement Network) each bring a distinct perspective to banking supervision, securities oversight, commodities regulation and illicit finance risk. Their jurisdictions differ, but their responsibilities are deeply connected. Effective oversight of digital assets requires that these agencies work with shared purpose, clear communication and genuine coordination.
The same principle applies internationally. The Financial Stability Board (FSB) continues to monitor vulnerabilities associated with crypto-assets and stablecoins. The Basel Committee on Banking Supervision (BCBS) has established prudential expectations for banks with crypto-asset exposures, effective from January 2025. The Bank for International Settlements (BIS), the International Monetary Fund (IMF) and the Financial Action Task Force each play important roles in shaping the standards that support safety, soundness and financial integrity. The United States should continue to work closely with the FCA in the United Kingdom, with European authorities and with global standard setters to promote consistent expectations wherever possible and clear communication wherever differences remain. Cross-border finance requires cross-border supervision. In digital assets, as in other areas of modern finance, cooperation is not optional. It is necessary.
For the United States, the enactment of the Guiding and Establishing National Innovation for U.S. Stablecoins Act, known as the GENIUS Act, represents a meaningful step toward the regulatory clarity the market has long needed. Signed into law in July 2025 and set to take full effect in January 2027, the legislation establishes the first comprehensive federal framework for payment stablecoins. It restricts issuance to permitted payment-stablecoin issuers, requires dollar-for-dollar reserve backing in high-quality liquid assets, mandates monthly reserve disclosures and independent attestation, and subjects issuers to Bank Secrecy Act and anti-money laundering obligations equivalent to those applied to banks. Both the OCC and the FDIC have advanced proposed rules to implement the Act, and the Federal Reserve retains oversight of the largest nonbank issuers through the Stablecoin Certification Review Committee (SCRC). This legislative and regulatory architecture reflects sound instincts. Payment stablecoins that are properly reserved, transparently disclosed and subject to rigorous compliance oversight can support innovation without threatening the depositor trust on which insured institutions depend. The GENIUS Act does not resolve every open question in digital finance. Questions of market structure, asset classification and consumer protection across a broader range of digital assets remain the subjects of active policy development. But as a foundation for payment-stablecoin regulation, it signals that the United States is prepared to lead through clear rules rather than regulatory ambiguity. That is the correct posture.
Governance must also be addressed directly, and boards bear particular responsibility here. As banks consider digital-asset services such as tokenization, custody arrangements and payment activity, directors must bring the same discipline they apply to credit risk, liquidity risk, capital adequacy and operational resilience. That means ensuring digital-asset activities are integrated into enterprise risk management (ERM), internal audit, compliance oversight and incident-response planning.
Boards should ask whether management genuinely understands the legal, technological and reputational dimensions of the activities under consideration. They should ask whether the institution has the culture and the controls to manage those risks—not just at the outset, but over time. Digital assets are not a static risk category. The technology evolves, the regulatory environment evolves, and the range of potential exposures evolves with them. Good governance is not a formality. It is the difference between innovation that earns confidence and innovation that quietly erodes it.
At its core, banking is a business of trust. The public relies on the financial system to hold money safely, process payments reliably and support economic activity with integrity. That trust has been built over generations through sound supervision, consistent compliance and institutional discipline. Digital assets may improve settlement efficiency, expand payment options and create new forms of value transfer. They may also expose weaknesses in oversight if institutions move too quickly without adequate controls in place. The answer is not to resist the future. It is to shape it responsibly.
Innovation must serve trust, not outrun it.
The next phase of digital finance should be defined not by speculation or fragmentation, but by clear boundaries, strong compliance and governance that earns confidence. If regulators work together, if boards fulfill their responsibilities and if financial institutions proceed with discipline, digital assets can develop in a way that strengthens the banking system rather than undermines it.
We do not need to choose between progress and prudence. The strongest financial systems have always been built on both. The task before us is to ensure that the digital age inherits that same standard.
The Honorable Rodney E. Hood served as the 32nd Acting Comptroller of the Currency and as a member of the Federal Deposit Insurance Corporation Board of Directors. He also served as Chairman of the National Credit Union Administration.
He currently serves on the boards of Northpointe Bancshares and Zest AI, and remains an active voice on banking regulation, digital asset policy, and the governance responsibilities of financial institution directors.