The cat’s out of the bag—confidential letters obtained in a legal showdown between Coinbase (COIN) and the Federal Deposit Insurance Corporation (FDIC) have shed light on the regulator’s 2022 campaign to halt crypto banking in the U.S., according to CoinDesk. These documents, which Coinbase unearthed through a legal effort led by History Associates Inc., paint a picture of crypto companies systematically being shut out of banking services.
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FDIC Stops Crypto Activity in Its Tracks
One letter from the FDIC explicitly instructed, “We respectfully ask that you pause all crypto asset-related activity.” Coinbase Chief Legal Officer Paul Grewal argued that these communications expose a deliberate move to sideline the industry. Speaking to CoinDesk, he stated, “This was no conspiracy theory… There was a concerted plan to deny banking services to a legal American industry.”
The letters also revealed that banks were subjected to onerous and often unclear compliance questions before receiving approval to proceed with crypto-related activities. Some were outright told to stop offering services while others were left in limbo, awaiting “supervisory expectations” that the FDIC hadn’t yet defined.
Redacted Letters Leave Big Questions Unanswered
The documents, though heavily redacted, highlight the FDIC’s efforts to hit pause on Bitcoin and crypto banking. However, they leave major questions unanswered, like which institutions were targeted and why. Grewal emphasized that further court proceedings would focus on unmasking these details.
This isn’t the first time U.S. regulators have faced accusations of debanking industries. Dubbed “Operation Chokepoint 2.0,” the effort mirrors a past initiative to isolate controversial but legal businesses from financial services. Speaking to Congress, Anchorage Digital CEO Nathan McCauley noted, “We’ve also been debanked… It’s particularly surprising because we ourselves are a national bank.”
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