Coinbase submits FOIA request again to the FED and FDIC, seeking clarification on "bank crypto deposit limits"

Coinbase's Chief Legal Officer Paul Grewal tweeted on 10/22 that the company has submitted two new Freedom of Information Act (FOIA) requests to U.S. regulatory agencies seeking disclosure of documents related to banks suppressing the cryptocurrency industry.

Explanation of "Bank Cryptocurrency Deposit Limit," Tracking Past FOLA Requests

Coinbase had previously requested the Federal Deposit Insurance Corporation (FDIC) to publicly disclose the document setting the percentage limit for cryptocurrency company deposits. According to reports, the Federal Reserve (FED) and FDIC have requested U.S. banks to keep deposits from cryptocurrency companies below 15% of the total bank deposits to manage risks.

However, Coinbase believes that regulatory agencies lack transparency in implementing these policies, especially concerning the cryptocurrency industry where many regulations are unclear. Apart from the deposit limit concern, Coinbase has also submitted another request to understand how regulatory agencies have responded to other FOIA requests related to the cryptocurrency industry.

Coinbase's Previous Legal Actions

Grewal emphasized that the two new sets of requests submitted this time are different from the lawsuit Coinbase filed against the Federal Reserve (FED) and FDIC last year. At that time, Coinbase accused the two regulatory agencies of not complying with the Freedom of Information Act (FOIA), and FDIC attempted to discourage banks from engaging in or expanding crypto-related business by issuing " Suspension of Crypto Business Letters."

Coinbase Sues SEC and FDIC: Failure to Comply with Providing Documents Legally, Attempting to Exclude Crypto Industry

Two Regulatory Agencies Suspected of Violating the Administrative Procedure Act

The Federal Reserve and FDIC not only requested many banks to limit deposits from cryptocurrency companies to within 15% of total bank deposits but also raised special concerns about the 24-hour payment systems used by crypto companies.

According to the U.S. Administrative Procedure Act, any new regulatory policy should solicit public opinions first, but it is said that the FED did not follow the procedure and directly implemented these restrictions. Some lawyers even pointed out that such actions might violate the due process of the U.S. Constitution. However, some argue that this is just an informal regulatory action and does not require legal procedures.

Banks and Government Refuse to Respond

The banks currently affected include Customers Bank, Cross River Bank, Western Alliance Bank, as well as the now-closed Silvergate and Signature Bank. Regarding these restrictions, FDIC and Western Alliance Bank have refused to comment, while the FED stated that there is no specific policy on deposit limits for cryptocurrency companies.

The United States is cracking down on the cryptocurrency industry, with the New York Department of Financial Services rejecting Choke Point 2.0