Innovation at the Speed of Markets: How Regulators Keep Pace with Technology

Digital Assets and Bank RegulationHouse Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence · March 26, 2026 · 119th Congress
The House Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence held this hearing to examine how the Federal Reserve, OCC, FDIC, and NCUA are adapting supervision to keep pace with AI, digital assets, and fintech partnerships. Begins at ▶ 0:03:25
Transcript
Highlights

Title

Bank regulators discuss AI, digital assets, and fintech supervision

Purpose

The House Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence held this hearing to examine how the Federal Reserve, OCC, FDIC, and NCUA are adapting supervision to keep pace with AI, digital assets, and fintech partnerships. Witnesses from the four agencies described their innovation offices, implementation of the GENIUS Act's stablecoin framework, and internal AI use, while Democratic members criticized the exclusion of the CFPB and raised concerns about deregulation and prediction-market insider trading. Begins at▶ 0:03:25

Who spoke

• Chairman Bryan Steil (R-WI)▶ 0:03:25: Opened the hearing on regulatory adaptation to AI, digital assets, and real-time payments▶ 0:03:54; later questioned witnesses on concrete innovation actions and AI fraud-fighting uses▶ 0:29:18▶ 0:30:34, and pressed Gallagher on a tonal shift at the OCC▶ 0:33:13.

• Rep. Stephen Lynch (D-MA), Ranking Member▶ 0:06:31: Criticized the exclusion of the CFPB and SEC from the hearing and cited SEC dismantling of enforcement teams, FinHub closure, and CFPB layoffs of over 1,500 employees▶ 0:07:24▶ 0:07:55; raised alarm about prediction markets, describing $18 billion in Kalshi/Polymarket volume and a trader winning 93% of bets on classified Iran operations▶ 0:34:53▶ 0:36:06.

• Rep. Maxine Waters (D-CA), Full Committee Ranking Member▶ 0:09:09: Objected to CFPB's absence and Acting Director Vought's failure to testify▶ 0:09:09; questioned Gallagher on ethics violations and whether OCC is increasing oversight of employee trading on prediction markets tied to the Venezuela strike▶ 0:44:54▶ 0:47:59.

• Rep. French Hill (R-AR), Full Committee Chairman▶ 0:10:20: Framed the hearing around whether agencies have structure and expertise to keep pace with innovation▶ 0:10:27; asked all witnesses about state-bank-supervisor coordination and tokenized deposits▶ 0:41:00▶ 0:43:42.

• Randall Guynn, Federal Reserve Board Director, Division of Supervision and Regulation▶ 0:12:23: Described the Fed's new policy to facilitate innovation consistent with safety and soundness▶ 0:12:53 and efforts to make supervision more transparent, including releasing operating manuals▶ 0:14:13; said the Fed rescinded SR 23-7 after finding the novel activity program inconsistent with its innovation policy▶ 1:04:06, and confirmed CBDC (retail and wholesale) work has ceased per Chair Powell▶ 1:24:30▶ 1:25:07.

• Jay Gallagher, OCC Senior Deputy Comptroller and Chief National Bank Examiner▶ 0:16:04: Said the OCC supervises over 1,000 institutions holding $17.9 trillion in assets▶ 0:16:31, and issued a notice of proposed rulemaking implementing the GENIUS Act▶ 0:19:00; said Comptroller Gould has stated a failure to innovate is itself a risk, contrasting with prior administration's focus on preventing downside risk▶ 0:33:32.

• Ryan Billingsley, FDIC Director, Division of Risk Management Supervision▶ 0:20:54: Said the FDIC is piloting AI internally and rescinded a prior crypto-activity notification requirement for banks▶ 0:23:06; described a multi-year IT modernization project expected to be mostly complete "in a couple years"▶ 0:24:04▶ 1:18:24.

• Amanda Parkhill, NCUA Acting Director, Office of Examinations and Insurance▶ 0:24:49: Described NCUA's Deregulation Project with 15 pending proposed rulemakings▶ 0:25:10 and roughly 4,300 federally insured credit unions serving 145 million members▶ 0:25:37; noted the GENIUS Act stablecoin rule comment period closes April 13▶ 0:28:08.

• Rep. Bill Foster (D-IL)▶ 1:06:16: Asked about Treasury's mobile driver's license/digital ID recommendation for KYC compliance under the GENIUS Act▶ 1:06:46; warned of accelerating bank-run risk from agentic AI, citing Silicon Valley Bank's $40 billion outflow in two days▶ 1:08:46▶ 1:09:10.

• A committee member (self-recognized chair segment)▶ 1:11:28: Emphasized regulatory consistency and questioned Guynn on the Fed's lack of a formal innovation office and how examiners are trained on emerging risk▶ 1:12:26▶ 1:13:11.

• Rep. Sylvia Garcia (D-TX)▶ 1:16:06: Criticized CFPB's absence amid $100 million in canceled contracts▶ 1:17:00; pressed Billingsley on the FDIC's IT modernization timeline and Guynn on model risk guidance updates last done 15-18 years ago▶ 1:17:42▶ 1:18:53.

• Rep. Warren Davidson (R-OH)▶ 1:21:30: Questioned Guynn on inconsistent Fed master account decisions, citing Custodia Bank's denial versus Kraken's approval by the Kansas City Fed▶ 1:22:11▶ 1:22:59; asked about central bank digital currency status under Trump's executive order▶ 1:24:04.

• Rep. Ro Khanna / Rep. LaCardo (D-CA)▶ 1:26:58: Raised concerns that excluding ACH payments from the Fed's proposed "skinny" master account would undercut access, citing $93 trillion in 2023 ACH volume and industry-proposed risk mitigations like pre-funding▶ 1:28:11▶ 1:29:35.

• Rep. Troy Downing (R-MT)▶ 1:31:31: Asked all four witnesses about staffing expertise, regulatory sandboxes, and GENIUS Act implementation status in rapid succession▶ 1:32:19▶ 1:33:34▶ 1:35:29.

• Rep. Ayanna Pressley (D-MA)▶ 1:36:38: Highlighted FedNow as a tool for workers to access pay faster and for small banks/credit unions to compete with fintech apps like Klarna and Affirm▶ 1:37:33▶ 1:38:01.

• A subcommittee member closing the hearing▶ 1:40:44: Introduced the AI Plan Act for a whole-of-government AI threat strategy▶ 1:41:12; asked Gallagher about updating AI model risk guidance (SR 11-7) unchanged for nearly a decade▶ 1:43:20, and Billingsley about detecting compromised foreign AI models like DeepSeek▶ 1:44:30.

Key moments

• Lynch detailed prediction-market growth from about $2 billion to $18 billion (Kalshi and Polymarket), noting a single trader won roughly 93% of five-figure bets on classified US/Israeli military operations against Iran, often placed hours before strikes occurred▶ 0:34:53▶ 0:36:06.

• Lynch said six newly created accounts made about $1 million correctly betting the US would strike Iran before a deadline, and that Israeli investigators indicted two individuals, including a military reservist, for using classified material to place bets▶ 0:36:30.

• Guynn said he wasn't sure prediction-market growth "rises to the level of systemic" concern for the Fed, and both Guynn and Billingsley declined to say whether the activity should be regulated as gambling, deferring to the SEC or CFTC▶ 0:37:38▶ 0:38:18▶ 0:38:29.

• Waters connected Trump's disclosed pre/post-strike conversations with oil companies before the Venezuela military action to a "familiar pattern" of insider profiting, but Gallagher said the OCC has no rules on prediction markets and would defer such issues to ethics officials▶ 0:45:22▶ 0:46:59.

• Guynn confirmed the Fed rescinded SR 23-7 (the novel activity supervision program tied to "Operation Choke Point 2.0") in August, folding crypto/fintech oversight into standard supervisory processes▶ 1:02:33▶ 1:04:06.

• Davidson pressed Guynn on why Custodia Bank was denied a Fed master account while the Kansas City Fed recently granted one, in a "skinny" form, to Kraken — Guynn acknowledged the process is "discretionary" and said Congress could consider making it mandatory▶ 1:22:32▶ 1:22:59.

• Gallagher cited OCC's supervision of over $17.9 trillion in bank assets (two-thirds of US commercial banking assets) and more than $90 trillion in assets under administration▶ 0:16:31.

• Sherman raised a Meta study finding roughly 10% of its annual revenue (~$16 billion) derives from ads for scams and banned goods, with up to 15 billion high-risk scam ads daily▶ 0:57:53▶ 0:58:15.

• Sherman challenged Gallagher on whether AI lending models risk encoding historical racial bias into future credit decisions, referencing name-based hiring discrimination studies▶ 0:58:47▶ 0:59:51.

• Foster warned that "bank runs at the speed of agentic AI" could replicate Silicon Valley Bank's $40 billion two-day outflow in minutes, and asked regulators whether real-time solvency monitoring tools are ready — Parkhill cited playbooks and liquidity facilities but did not confirm real-time detection capability▶ 1:08:46▶ 1:10:47▶ 1:11:01.

Metadata

CommitteeHouse Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence
Chamber / CongressHouse · 119th Congress
DateMarch 26, 2026
TypeHearing
Witnesses
Mr. Jay Gallagher — Senior Deputy Comptroller and Chief National Bank Examiner, Office of the Comptroller of the Currency
Mr. Ryan Billingsley — Director, Division of Risk Management Supervision, Federal Deposit Insurance Corporation
Mr. Randall Guynn — Director, Division of Supervision and Regulation, Federal Reserve Board
Ms. Amanda Parkhill — Acting Director, Office of Examinations and Insurance, National Credit Union Administration
Videoyoutube
Transcript358 caption blocks · 16,620 words · 1:46:21 runtime
EventCongress.gov 119110