FDIC Urges Banks to Halt Crypto Services
The Federal Deposit Insurance Corporation (FDIC) has recently been in the spotlight for urging banks to pause or avoid offering crypto-related services, including basic Bitcoin transactions. This initiative has raised concerns within the crypto community and has sparked discussions about the future of digital assets in the banking sector.
Documents Revealed by Coinbase
Coinbase’s chief legal officer, Paul Grewal, recently shared unredacted documents that shed light on the FDIC’s stance on crypto services. These documents, known as “pause letters,” emphasize the need for banks to suspend or refrain from engaging in any form of crypto activity, from simple BTC transactions to more complex offerings.
Grewal stated, “They show a coordinated effort to stop a wide variety of crypto activity — everything from basic BTC transactions to more complex offerings.”
Freedom of Information Act Request
The release of these documents was a result of Coinbase’s Freedom of Information Act (FOIA) request, seeking clarity on the alleged 15% deposit cap imposed on crypto-friendly banks. Despite the FDIC complying with the initial request, the documents were heavily redacted, prompting Coinbase to file a new request for more accessible versions.
Grewal revealed that additional letters were found in the new request, indicating a need for transparency and accountability within the banking sector. This has sparked calls for Congressional hearings to address the growing concerns surrounding the FDIC’s stance on crypto services.
FDIC’s Response
In response to the allegations raised by Grewal, the FDIC published an internal memorandum outlining how supervisors should approach banks planning to offer crypto services. While Grewal’s letters suggest a clear directive to avoid crypto activities, the FDIC’s recommendations to supervisors do not explicitly state this.
Furthermore, the FDIC’s document includes a draft response that supervisors can use when notifying banks about their involvement in crypto services. This demonstrates a nuanced approach by the FDIC in regulating banks’ engagement with digital assets.
FDIC Chairman Martin Gruenberg clarified that the agency is not obstructing crypto firms’ access to banking services but is closely monitoring banks engaged in crypto activities. This statement aims to reassure the crypto industry players in the US who are advocating for better access to banking services.
