Coinbase’s chief legal officer, Paul Grewal, asserts that recently released records reveal the Federal Deposit Insurance Corporation’s (FDIC) intentional attempts to impede the U.S. crypto industry’s operations.
Grewal claims that court-ordered non redactions show a concerted effort to restrict services from stablecoin issuance and blockchain-based payments to simple Bitcoin transactions. The letters, which were first discovered via Freedom of Information Act (FOIA) requests, imply that the FDIC exerted pressure on banks to limit or stop cryptocurrency services. Grewal claims that the agency’s activities go beyond mere supervision and actively stifle innovation, characterizing these initiatives as part of “Operation Chokepoint 2.0.”
The extent of the FDIC’s power has been emphasized by cryptocurrency supporter Nic Carter, who claims that the government sent at least 25 letters between 2022 and 2023. Financial organizations were apparently deterred by these emails from using blockchain technology, sponsoring stablecoins, or providing services for Bitcoin and Ethereum.
Critics claim that involvement of this kind might hamper competition and innovation in the banking industry, which is why the discoveries have spurred demands for congressional hearings to examine the activities taken by the Federal Deposit Insurance Corporation (FDIC).
The recently made public letters, which were acquired via a court-mandated Freedom of Information Act request, demonstrate the FDIC’s repeated requests for banks to halt crypto-related activities until more regulatory assessments are conducted.
“We request that the bank refrain from providing cryptocurrency service to its customers until we complete our review,” reads one letter. The papers include everything from simple Bitcoin transactions to more intricate cryptocurrency deals.
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