The debate over the Federal Deposit Insurance Corporation’s (FDIC) treatment of the crypto industry has once again been thrust into the spotlight by CryptoLaw, a platform founded by pro-crypto lawyer John Deaton. The firm has accused the FDIC of having criminally misplaced priorities, pointing to recent revelations in a class action lawsuit against payroll and human resources firm Deel.
According to court documents, Deel allegedly facilitated payments to users of Russia’s T-Bank, despite sanctions against Russia for its actions in Ukraine. The plaintiffs in the lawsuit claim that T-Bank’s website directed customers to receive payments via Deel as recently as October 2024. This has led to accusations that the FDIC allowed U.S. companies to send payments to sanctioned Russian banks while freezing out legitimate crypto firms.
The accusations against the FDIC come amidst a broader debate about the treatment of the crypto industry by banking regulators in the U.S. The theory that crypto is being “debanked” gained traction in early 2023, with some likening it to Operation Chokepoint 2.0. This theory suggests that banking regulators are trying to lock out the crypto industry from the banking sector through informal guidance, similar to the Operation Chokepoint initiative targeting payday lenders, arms dealers, and pornographers in 2013.
The debate surrounding crypto debanking was reignited in November 2024 when Marc Andreessen of Andreessen Horowitz lamented the trend on the Joe Rogan Experience podcast. Coinbase has also added fuel to the fire by obtaining letters from the FDIC through a Freedom of Information Act request, showing that the regulator instructed banks to pause crypto services pending regulatory reviews.
Despite these developments, FDIC Chair Martin Gruenberg has defended the regulator’s actions, stating that the instructions were aimed at discouraging banks from adding crypto to their balance sheets and were not intended to impact individual customer transactions. The ongoing debate highlights the complex relationship between the crypto industry and traditional banking regulators, with both sides continuing to push their respective agendas.