The Federal Deposit Insurance Corporation (FDIC) warned banks against cryptocurrency but allowed them to serve crypto customers.
The FDIC told banks to avoid directly holding cryptocurrency in 2022 and 2023. What the regulator did not do was to order the institutions to stop serving crypto companies — despite industry complaints of a widespread “debanking.”
The details
A judge ordered the FDIC to provide its supervisory “pause letters,” which shed light on the regulator’s pressures on the banking sector and its treatment of the cryptocurrency industry. These letters were sent to unidentified banks after History Associates Incorporated sued the regulator on behalf of the publicly traded cryptocurrency exchange Coinbase in the United States.
The regulator first provided these letters last month but was then ordered by the judge to resubmit them with more “nuanced redactions.” The 25 letters that were then provided include two additional letters that were sent to unidentified banks that were not previously included.
The lawsuit is part of a campaign by Coinbase looking to expose what it — and other firms in the industry — perceive as a concerted effort by the banking sector to prevent crypto companies from accessing the traditional financial system. Coinbase’s chief legal officer, Paul Grewel, wrote in a recent X post:
“It took a Court order but you can now read them for yourself below. They show a coordinated effort to stop a wide variety of crypto activity — everything from basic BTC transactions to more complex offerings.”
Grewel also highlighted that two more letters making it into the second lot of shared documents makes him suspicious, noting that “it’s hard to believe in their good faith.” He suggested that further investigation is warranted:
“The new Congress should launch hearings on all this without delay.”
The FDIC also published a 2022 internal memo that provided instructions on how supervisors should assess queries from lenders that want to deal in crypto assets directly, compared to offering services to cryptocurrency companies. All those documents were released mere weeks before pro-crypto president-elect Donald Trump takes office, expected to issue an executive order directing bank regulators to treat crypto more favorably.
