- Internal FDIC letters instructed banks to halt crypto-related activities, creating barriers to crypto integration.
- Vague compliance requirements led to delays or cancellations of banks’ plans to offer cryptocurrency services.
- Coinbase claims the FDIC’s actions reflect coordinated efforts to restrict crypto access to banking.
Internal Federal Deposit Insurance Corporation (FDIC) communications revealed plans to shield U.S. banks from crypto businesses in 2022. These documents, revealed by Coinbase, show the pressure federal banking authorities placed on the cryptocurrency industry to maintain banking partnerships.
These documents, obtained through a legal dispute by Coinbase, include correspondence that advised banks to suspend their crypto-related activities. CoinDesk was the first to report on these communications.
FDIC’s Requests to Pause Crypto Activities
The FDIC communications reportedly directed U.S. banks to halt their involvement in crypto services until compliance questions were resolved. Coinbase said these directives delayed or disrupted banks’ plans to offer crypto-related services.
One letter from the FDIC reportedly stated: “We respectfully ask that you pause all crypto asset-related activity.” These requests often required banks to address detailed compliance inquiries before proceeding. In many cases, the process caused significant delays or resulted in the abandonment of planned crypto projects.
This approach reflects the problems financial institutions face when trying to adapt to the regulations regarding digital assets. Banks reportedly hesitated to approach crypto firms due to potential regulatory and fraud risks, as well as reputational costs.
Industry Concerns Over “Operation Chokepoint 2.0”
Coinbase and other industry participants claim the FDIC communications reflect a broader strategy called “Operation Chokepoint 2.0.” This term refers to what some industry participants call a campaign by regulators to freeze out crypto firms from mainstream banking.
Paul Grewal, Coinbase CEO, commented on the issue, stating that the documents reveal a coordinated effort by FDIC to restrict banking relationships for all legitimate crypto firms. Grewal pointed out that portions of the disclosed records are still blacked out, making people uncertain of the agency’s participation.
Additionally, the need for clear regulatory guidance has created ongoing friction between crypto companies and federal banking authorities. Without formal rules, banks have reportedly received informal directives that discourage engagement with crypto businesses. Critics argue this approach stifles the growth of lawful crypto operations by denying them access to essential banking infrastructure.
The lack of clear regulatory guidance has created friction between crypto companies and federal banking authorities. Unclear legal requirements have restricted many banks from partnering with crypto businesses. Critics argue that policy reforms are needed to uplift the affected businesses that rely on conventional banking.
Moreover, the FDIC’s actions showcase the larger issues the cryptocurrency industry faces regarding regulation. However, companies such as Coinbase remain adamant about promoting transparency and using federal agencies to define the future of cryptocurrency.
