A legal battle between the crypto industry and the Federal Deposit Insurance Corporation (FDIC) has led to the release of confidential documents revealing the U.S. banking regulator’s active role in halting crypto banking services.
According to Coinbase, the documents, which were made public following a court victory, show that the FDIC was instructing banks to pause or prevent cryptocurrency-related activities throughout 2022. The exchange, which had hired History Associates Inc. to fight for access to these documents, claims the communications expose a coordinated effort by the FDIC to restrict crypto businesses’ access to banking services.
The FDIC letters, some of which are heavily redacted, were shared by Coinbase on Friday. They show how the regulator halted or delayed crypto services, demanding further clarification on compliance before banks could offer digital asset products. One letter stated, “We respectfully ask that you pause all crypto asset-related activity,” adding that the FDIC would notify banks at a later date regarding new expectations for engaging in crypto operations.
Paul Grewal, Coinbase’s Chief Legal Officer, argued that the letters serve as undeniable proof that the crypto industry faced a deliberate and systematic exclusion from banking services. He claims that the FDIC’s actions went beyond mere speculation or conspiracy theories. “This was no conspiracy. The FDIC executed a clear plan to deny banking services to a fully legal industry,” Grewal said. “That should concern everyone.”
The letters, dating back to 2022, show that crypto banking activity was either halted before it began or subjected to extensive regulatory review, often with vague compliance requirements. In many instances, banks were asked to address numerous complex questions regarding how they would handle crypto business before proceeding.
Although the FDIC has not yet implemented formal regulations for the crypto industry, the documents reflect the regulator’s growing caution toward crypto-related financial activities.
Operation ChokePoint 2.0
The revelations from Coinbase come amid broader concerns about the so-called “Operation ChokePoint 2.0,” a government initiative designed to sever banking access for controversial yet legal industries, including the crypto sector. This issue was discussed at length in a recent House Financial Services Committee hearing, where crypto executives testified that their businesses had been denied essential banking services.
During the hearing, Nathan McCauley, CEO of Anchorage Digital, a national bank chartered by the Office of the Comptroller of the Currency (OCC), shared his own experience of being “debanked” despite being federally regulated. “We’ve also been debanked,” McCauley said, underlining the widespread nature of the issue.
With continued legal proceedings, Coinbase intends to push for the full unredacted release of the FDIC’s communications, seeking transparency on the specific institutions involved and the reasons behind the agency’s stance.
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