Coinbase’s chief legal officer, Paul Grewal, recently revealed documents that shed light on the Federal Deposit Insurance Corporation’s (FDIC) stance on banks offering crypto-related services. The unredacted “pause letters” shared by Grewal in December 2024 show a coordinated effort by the FDIC to discourage banks from engaging in various crypto activities, including basic Bitcoin transactions.
These letters were uncovered as part of Coinbase’s Freedom of Information Act (FOIA) request aimed at understanding the alleged 15% deposit cap imposed on crypto-friendly banks. While the initial documents provided by the FDIC were heavily redacted, a subsequent request unveiled additional letters urging banks to steer clear of crypto services.
Grewal emphasized the importance of transparency in these matters, urging Congress to launch hearings to address the implications of these directives. He believes that these letters underscore Operation Chokepoint 2.0, an alleged government initiative to stifle the growth of the US crypto industry by restricting access to banking services.
In response to these revelations, the FDIC released an internal memorandum outlining how supervisors should approach banks considering crypto services. While Grewal’s letters suggest a bias against crypto, the FDIC maintains that it does not explicitly prohibit banks from entering the crypto space. Instead, banks engaging in crypto activities are subject to increased supervisory scrutiny.
Despite assurances from FDIC Chairman Martin Gruenberg that the agency is not impeding crypto firms’ access to banking services, the crypto industry in the US remains concerned about the challenges they face in securing banking partnerships. Industry stakeholders are hopeful that the incoming administration, led by President-elect Donald Trump, will address these issues promptly.
As reported by Reuters in December 2024, the FDIC’s approach to crypto-related banking services remains a point of contention within the industry. The ongoing dialogue between regulators, banks, and crypto firms will be crucial in shaping the future of crypto banking in the US.