The FDIC Has Told Banks to Refrain From Providing Crypto Services in Over 20 Cases, Coinbase Finds

Coinbase chief legal officer Paul Grewal said that the crypto exchange has discovered over 20 instances where the Federal Deposit Insurance Corporation (FDIC) asked banks to “pause” or “refrain from providing” or “not proceed” with crypto-related banking services. In an X post, Grewal wrote: In short, the contents are a shameful example of a government agency trying to cut off financial access to law-abiding American companies.”

The discovery was made after the FDIC shared 23 documents with Coinbase in accordance with its two Freedom of Information Act (FOIA) requests. Coinbase had requested access to letters the FDIC sent to banks to pause crypto services. The FDIC is yet to release the actual letters, but the shared documents provide condensed summaries. The letters, dated between March and October 2022, were addressed to bank presidents and boards of directors. The names of the banks were not disclosed.

In each of the letters, the FDIC said that it is reviewing the banks’ proposed crypto services and advised them to hold off on providing such services until the review is completed. In most cases, the FDIC was concerned with the “bank’s legal analysis, assessment of compliance with FDIC regulations, safety and soundness, and consumer protection.” In almost every letter, the FDIC states that it requires further information in order to determine whether the proposed crypto service is safe. According to Grewal, the FDIC sent the letter to the bank as part of Operation Chokepoint 2.0.

Grewal said that Coinbase will continue to “get clarity” from regulators through FOIA requests and “any other means necessary.” He added: “The public deserves transparency, not an agency that’s working behind a bureaucratic curtain.” Earlier this week, in its shareholder letter for the third quarter of 2024, Coinbase said that it is “prepared to work with either administration,” regardless of whether Vice President Kamala Harris or Republican nominee Donald Trump wins the election on Nov 5.

This is because Coinbase believes that both presidential candidates have adopted crypto-friendly stances. The Oct 30 letter stated: “Both presidential candidates, as well as politicians across the political spectrum, have adopted more favorable positions toward crypto, a significant shift from previous years.”