Coinbase discloses unredacted FDIC letters cautioning banks to avoid basic Bitcoin services
Paul Grewal, the chief legal officer of Coinbase, revealed papers showing that the Federal Deposit Insurance Corporation (FDIC) advised banks to stop or steer clear of basic Bitcoin (BTC) sales in addition to crypto-related services.
The letters are unaltered copies of materials that Grewal provided on December 6, 2024. Due to their frequent recommendations to halt or abstain from utilizing crypto services, they were given the moniker “pause letters.”
These letters are the outcome of Coinbase’s October 18 Freedom of Information Act (FOIA) request for information on a purported 15% deposit limit placed on banks that cater to cryptocurrency.
The request was fulfilled by the FDIC in December 2024, although the records were severely redacted. Coinbase thus submitted a fresh request to see versions that included more easily accessible sections.
Grewal stated that the FDIC identified two additional letters in this latest request, saying that clarifying pressures reveal new material and urged Congress to hold hearings “without delay.”
He had previously claimed that the letters demonstrated the reality of Operation Chokepoint 2.0, a purported attempt by the Joe Biden administration to restrict access to financial services in order to impede the expansion of the US cryptocurrency market.
In response, the FDIC’s Division of Risk Management Supervision released an internal memo in 2022 outlining the proper way for its supervisors to interact with banks who want to provide cryptocurrency services.
The FDIC’s recommendations do not specifically inform its supervisors that the FDIC advised banks to refrain from entering the cryptocurrency space, despite Grewal’s letters making this clear.
Additionally, supervisors might utilize the draft in the FDIC’s paper to respond to banks informing them of their involvement with cryptocurrency. Some of the letters Grewal presented resemble the draft.
FDIC Chairman Martin Gruenberg said the government is not preventing cryptocurrency companies from using banking services, as reported by Reuters in December 2024. Banks that deal with cryptocurrency, however, are “subject to supervisory attention.”
Access to financial services is a top priority for US crypto sector participants, who believe President-elect Donald Trump will address the issue on his first day in office.
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