Crypto exchange titan Coinbase has unearthed over 20 cases of the Federal Deposit Insurance Corporation (FDIC) discouraging US banks from engaging with cryptocurrency-related banking activities. The revelations came to light after the crypto company pushed two Freedom of Information Act requests out to the FDIC, an agency tasked with insuring US bank deposits. Coinbase demanded transparency regarding the perceived ongoing crackdown on cryptocurrency among financial institutions.
Paul Grewal, Coinbase’s chief legal officer, champions public transparency, and is pushing back against the agency’s attempts to restrict financial activities behind bureaucratic curtains. He has objected to the FDIC’s strategy of influencing banks to either “pause” or avoid adopting crypto-banking services.
According to court documentation, the FDIC has repeatedly questioned banks’ risk assessment processes regarding crypto services. The agency has actively advised such institutions to refrain from offering crypto services until completing a thorough risk assessment.
In one case outlined in the court released documentation, the FDIC had called for a meeting with a bank’s management to discuss its crypto services. Despite the bank producing additional documentation post the meeting, the FDIC continued to raise concerns and advised the bank to halt any expansion of services until a complete review is executed.
This development elicits concerns about the FDIC’s understanding of cryptocurrencies and the potential pressure on banks to curb cryptocurrency services, placing a spotlight on the need for clear regulatory guidelines within financial institutions.