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Highlights
- Coinbase obtained FDIC "pause letters" revealing efforts to limit banking access for crypto firms in 2022 through FOIA requests.
- FDIC's communications showed deliberate delays and questions aimed at halting crypto-related banking activities, fueling "Operation Chokepoint 2.0."
- Crypto industry leaders argue government actions restrict legal crypto businesses' access to banking services.
Coinbase, one of the largest crypto exchanges in the U.S., has made public a series of documents that point to the Federal Deposit Insurance Corporation’s (FDIC) involvement in restricting banking access for crypto companies. The letters, obtained through a Freedom of Information Act (FOIA) request, suggest that in 2022, the FDIC instructed banks to halt or limit services to crypto businesses.
The exchange’s legal team asserts that these documents provide evidence of a concerted effort by federal agencies to suppress the crypto industry.
Coinbase Exposes FDIC’s ‘Pause Letters’, Proving Role in Crypto Banking Restrictions
Coinbase recently revealed a set of “pause letters” sent by the FDIC to financial institutions in 2022. These letters requested that banks temporarily halt crypto-related activities until further review of compliance and risk factors.
The documents, uncovered through legal action by the exchange, shed light on the FDIC’s efforts to limit the banking services available to crypto businesses.
The “pause letters” explicitly instructed banks to pause any crypto asset-related activities. This signals a proactive stance by regulators to discourage financial institutions from engaging with cryptocurrency industry.
Paul Grewal, Coinbase CLO commented,
“The letters that show Operation Chokepoint 2.0 wasn’t just some crypto conspiracy theory. FDIC is still hiding behind way overbroad redactions. And they still haven’t produced more than a fraction of them.”
Last month, Coinbase CLO Paul Grewal revealed that the FDIC has been actively working to restrict banks from offering crypto services.
Operation Chokepoint 2.0 Allegations and Its Impact on Crypto Firms
The documents made public by Coinbase have rekindled the debate around “Operation Chokepoint 2.0,” a term coined by critics to describe alleged government efforts to stifle the crypto industry. According to the exchange legal team, these letters provide concrete evidence of a coordinated strategy by the FDIC to limit crypto firms.
Crypto executives have long complained about the difficulties of securing banking relationships due to regulatory uncertainty. The letters confirm that federal agencies have been using informal measures to suppress the industry.
However, in recent reports, US Rep. French Hill has vowed to investigate Operation Chokepoint 2.0, which he argues targets industries like crypto through politicized debanking. He has called for transparency in financial oversight and stronger protections for businesses facing unfair regulatory practices.
According to reports, Banks were asked to submit detailed analyses, including risk assessments and income projections, before moving forward with offering crypto services. This level of scrutiny and the subsequent delays were a tactic to stop financial institutions from entering relationships with the crypto sector.
Coinbase has vowed to continue pursuing transparency, despite heavy redactions in the documents released by the FDIC. As Coinbase legal chief Paul Grewal stated, further disclosure will provide additional clarity on the extent of the regulatory actions taken against the industry.
Similarly, John Deaton recently called for the incoming US government to hold accountable those responsible for debanking crypto firms.
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