Coinbase Reveals FDIC Documents Urging Banks to Halt Crypto Services
Coinbase’s chief legal officer, Paul Grewal, recently shared unredacted documents that shed light on the Federal Deposit Insurance Corporation’s (FDIC) efforts to discourage banks from offering crypto-related services, including basic Bitcoin transactions. These documents, referred to as “pause letters,” recommend suspending or refraining from engaging in any crypto activities.
Grewal disclosed these documents on Dec. 6, 2024, following a Freedom of Information Act (FOIA) request filed by Coinbase to clarify a rumored 15% deposit cap on crypto-friendly banks. Despite the FDIC initially providing heavily redacted versions of the documents, Coinbase requested access to more accessible versions, leading to the discovery of additional letters that highlight the agency’s efforts to limit crypto activities.
The uncovered information has raised concerns about Operation Chokepoint 2.0, an alleged initiative by the Biden administration to impede the growth of the US crypto industry by restricting access to banking services. Grewal is urging Congress to launch hearings promptly to address these issues.
In response to these revelations, the FDIC released an internal memorandum from its Division of Risk Management Supervision in 2022, outlining guidelines for supervisors dealing with banks interested in offering crypto services. While Grewal’s documents suggest the FDIC advised banks against entering the crypto space, the agency’s recommendations to supervisors do not explicitly state this.
Furthermore, the FDIC’s memorandum includes a draft response that supervisors can use when banks notify them of their involvement in crypto activities, resembling some of the letters shared by Grewal. Despite these findings, FDIC Chairman Martin Gruenberg emphasized that the agency is not intentionally blocking crypto firms’ access to banking services but will closely monitor banks engaging with crypto.
As the crypto industry in the US prioritizes access to banking services, stakeholders are hopeful that the upcoming administration, under President-elect Donald Trump, will address these concerns promptly. The industry awaits further clarity on the regulatory landscape and hopes for a more conducive environment for crypto businesses to thrive.