The Federal Deposit Insurance Corporation (FDIC) has made public 175 internal documents detailing its previous interactions with banks regarding cryptocurrency services, shedding new light on what became known as "Operation Chokepoint 2.0."
Acting FDIC Chairman Travis Hill announced the release of these documents, which came following a lawsuit filed by Coinbase seeking greater transparency about regulatory measures affecting the crypto sector. The documents primarily focus on "pause letters" sent to 24 financial institutions in 2022, instructing them to halt or avoid crypto-related services.
The newly revealed documents expose a pattern where banks attempting to offer cryptocurrency services faced consistent regulatory resistance. Banks received initial letters requesting service suspension and additional information, followed by extended periods of regulatory silence, ultimately leading many institutions to abandon their crypto initiatives.
Paul Grewal, Coinbase's Chief Legal Officer, responded to the release on social media platform X, stating "We were right. The previous FDIC leadership lied to us all." He also suggested that additional undisclosed pause letters may exist.
The documents reveal that the FDIC's decisions to restrict crypto services were based on concerns about Bitcoin volatility, potential bank reputational risks, and consumer protection issues. However, in a notable shift, the FDIC is now revising its stance on cryptocurrency, with Hill announcing plans to allow U.S. banks to manage crypto assets and offer tokenized deposits without prior regulatory approval.
This policy reversal comes amid Senate hearings on the alleged de-banking of crypto firms during the Biden Administration. During testimony, Nathan McCauley, CEO of Anchorage Digital, described how his firm and other crypto ventures struggled to maintain banking relationships during this period.
The FDIC's new direction includes replacing Financial Institution Letter 16-2022 and creating pathways for banks to engage in crypto and blockchain activities while maintaining safety and soundness principles, marking a substantial shift in regulatory approach toward digital assets.