π¨ U.S. Regulator Told Banks to Avoid Crypto, Letters Obtained by Coinbase Reveal
In 2022, the Federal Deposit Insurance Corp. (FDIC) halted or prevented numerous U.S. banks from engaging in crypto banking activities, as revealed by internal communications obtained through a lawsuit by Coinbase. The documents show that the FDIC explicitly instructed banks to pause all crypto-related activities until further notice, citing the need for compliance clarity.
Coinbase's Chief Legal Officer, Paul Grewal, argued that these letters provide concrete evidence of a systematic effort by the FDIC to restrict banking services for the legal crypto industry. He emphasized that the letters confirm the existence of a coordinated plan to deny these services, countering claims that it was merely conspiracy or speculation.
The FDIC communications indicated uncertainty about the regulatory requirements needed to approve crypto activities, leaving banks in limbo. Although the FDIC, along with the Federal Reserve and the Office of the Comptroller of the Currency, has issued broad cautionary guidelines regarding crypto, no formal regulations have been established.
The FDIC did not comment on the release of these letters. Grewal plans to seek the removal of redactions to clarify the institutions involved and their proposed services. This issue has been referred to as "Operation Chokepoint 2.0," reminiscent of a previous government initiative targeting controversial businesses. The topic emerged in a recent congressional hearing, where crypto leaders expressed concerns about being cut off from financial services, even as federally chartered banks like Anchorage Digital faced similar challenges.
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