The U.S. Federal Deposit Insurance Corporation (FDIC) has previously asked financial institutions to pause cryptocurrency-related activities, according to heavily redacted letters obtained through a lawsuit filed by Coinbase.
The letters, dating from March 2022 to May 2023, indicate increased scrutiny of crypto activities in the banking sector.
Coinbase, represented by consulting firm History Associates Inc., filed a lawsuit against the FDIC in June, claiming the agency was trying to isolate the cryptocurrency industry from banking services. The lawsuit also sought the release of “halt letters” the FDIC reportedly issued to several financial institutions.
In a March 2022 letter, the FDIC stated, “…at this time, the FDIC has not yet determined what regulatory filings would be required for a bank to engage in this type of activity. As a result, we respectfully request that you cease all activities related to crypto assets.”
The lawsuit also alleges that the FDIC failed to comply with Freedom of Information Act (FOIA) requests, leading Coinbase to seek a court order to compel the agency to release the documents.
The FDIC Office of Inspector General, which oversees the agency’s operations, confirmed in a 2023 report that the FDIC began issuing “pause letters” to financial institutions in 2022. These letters not only requested a halt to the expansion of crypto activities, but also requested detailed documentation related to crypto, including cost-benefit analyses, disclosures, and marketing materials.
Coinbase Chief Legal Officer Paul Grewal called the developments proof that regulatory measures like “Operation Chokepoint 2.0” are real. In a post on X (formerly Twitter), Grewal said the letters confirm that the regulatory push to restrict crypto banking access is more than just a “conspiracy theory about the crypto industry.”
*This is not investment advice.
