Key Takeaways:
- The FDIC issued “pause letters” to financial institutions halting crypto-related activities.
- Coinbase sued the FDIC, claiming these actions were part of a broader effort to block crypto from the banking sector.
- The ongoing legal battle aims to expose the full extent of these actions, including unredacted documents.
The Federal Deposit Insurance Corporation (FDIC) has been accused of targeting the crypto industry by halting crypto-related banking activities. Major crypto exchange Coinbase is leading the charge on the legal front, seeking letters ordering financial institutions to halt all cryptocurrency-related activity – through a lawsuit filed against the FDIC in June.
The letters, which were heavily redacted, were obtained by Coinbase through its consultant firm, History Associates Inc. The exchange has long argued these actions represent an effort by the FDIC to choke the crypto sector’s access to essential banking services.
Coinbase Challenges FDIC’s Actions
In an X post, Coinbase’s Chief Legal Officer Paul Grewal lashed back at the FDIC; the situation was proof to him that Operation Chokepoint 2.0 is real.
He criticized the FDIC’s over-redacting of the letters and termed it a cover-up. According to Grewal, these letters are proof of an intentional and coordinated effort to prevent crypto businesses from banking, which leaves many of them without the critical ability to access financial services.
The lawsuit by Coinbase, therefore, seeks full transparency of the cases and unredacted versions so that the crypto industry truly appreciates the real extent and nature of these regulatory actions.
The Fight for Transparency Continues
These FDIC letters, which date through 2022, push the financial institutions to stop the crypto-related activities until the resolution of a series of questions about compliance from this regulator.
These demands seemed to call into question the undefined regulatory expectations of the FDIC, with a lack of clarity regarding what compliance would be needed for crypto to move forward. Though there were some public cautions placed by U.S. bank regulators on crypto, rules governing the industry do not yet exist.
In light of the ongoing legal dispute, Coinbase is trying to lift many of the redactions that would hopefully expose a detailed look at the involved institutions, the nature of their activities, and reasoning toward the decisions by the FDIC.
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