US gov told banks to suppress crypto, Coinbase documents show

Internal communications from the Federal Deposit Insurance Corporation suggest the agency is deliberately limiting U.S. banks’ involvement in crypto businesses in 2022.

These communications, unearthed by Coinbase, highlight how regulatory uncertainty is increasing tensions between crypto firms and federal banking authorities.

The documents, obtained by Coinbase through a legal challenge and released on Friday, include letters instructing banks to halt all cryptocurrency-related activities.

“We respectfully request that you cease all crypto asset-related activities,” the documents state.

These FDIC directives reportedly delayed or halted banks’ plans to offer crypto services until they met vague compliance requirements.

CoinDesk was the first to report this news.

FDIC to banks: “We respectfully request that you cease all activities related to crypto assets.”

Shocking. Thank you to the Coinbase legal team for doggedly pursuing these documents. https://t.co/VtLs9Uhbuj

— Miller (@millercwl) December 6, 2024

Coinbase claims these communications reveal a coordinated effort to restrict banking access for legitimate crypto businesses, a practice some in the industry have dubbed “Operation Chokepoint 2.0.”

Crypto’s fractured relationship with banking

For years, crypto companies have struggled to maintain reliable banking partnerships in the U.S., citing vague or overly cautious guidance from federal regulators. Banks are hesitant to collaborate with crypto companies due to concerns about regulatory compliance, fraud risks, and potential reputational damage.

Without clear rules, many banks stay away from the industry altogether, creating a significant barrier for crypto businesses that rely on traditional banking to operate.

The FDIC’s letters appear to underscore this dynamic. Communications show that the agency is asking banks to answer complex questions about the crypto activities they are offering. These investigations often delayed approvals or led banks to abandon plans.

Coinbase executives argue that the lack of official crypto guidelines allows regulators to impose unofficial restrictions, effectively isolating the crypto industry from mainstream financial services.

The letters show that Operation Chokepoint 2.0 is not just some crypto conspiracy theory. [The FDIC] Paul Grewal, Coinbase’s CLO, wrote about X: “Still hiding behind overly broad redactions.”

Operation Chokepoint 2.0 describes regulatory efforts to limit the crypto industry’s access to banking services, as crypto advocates claim. Critics argue that this approach stifles legitimate crypto businesses by effectively cutting them off from traditional financial infrastructure.

“Law-abiding American businesses should be able to access banking services without government interference. “The new administration has an opportunity to reverse many bad crypto policy decisions, chief among them politically motivated regulatory decisions like Operation Chokepoint 2.0.”

Paul Grewal, via X.