FDIC document exposing crackdown on crypto industry, Coinbase legal team criticizes: "Quite shameful"

Previously, the U.S. exchange Coinbase had submitted two new Freedom of Information Act (FOIA) requests to the Federal Deposit Insurance Corporation (FDIC) seeking to disclose documents related to banks suppressing the cryptocurrency industry. Recently, the FDIC finally made public the documents related to "suppressing the crypto industry," which also sparked a series of questions from industry players about government transparency. Coinbase's General Counsel, Paul Grewal, also criticized the matter on Twitter, stating, "Quite shameful."

FOIA Documents Reveal Government's Request for Banks to "Pause" Crypto Services

According to recently exposed "pressure letters" from the FDIC, between March and October 2022, the FDIC sent over 20 letters to multiple banks requesting them to "pause," "not offer," or "discontinue" services related to crypto assets. These letters are seen as part of "Chokepoint 2.0," indicating oppressive policies aimed at pressuring crypto businesses and stifling the development of the crypto industry. Grewal stated that these letters demonstrate the government's covert efforts to weaken the financial connections between compliant crypto businesses and consumers.

Bureaucratic Backstage Operations Suppress Industry Development, Grewal Criticizes as "Quite Shameful"

Grewal is highly displeased with this situation. He stated that such "bureaucratic backstage actions" seriously hinder the opportunities for law-abiding businesses to enter the market and impede financial innovation. He further remarked, "The public should have access to transparent information, rather than witnessing the FDIC, a government entity, engaging in behind-the-scenes maneuvers to restrict the legitimate development of the crypto industry. This is quite shameful."

Grewal also mentioned that although the complete letters have not been fully disclosed, based on the currently exposed content, it is evident that the FDIC is requesting banks to pause crypto-related initiatives and services until reviews are completed. He added that Coinbase and other crypto advocacy groups will continue to push for FOIA requests to reveal more related documents.

Coinbase has once again submitted FOIA requests to the Fed and FDIC, seeking clarification on "bank crypto deposit limits."