Coinbase Gets Banks Advising FDIC to Restrict Crypto Services

Coinbase has revealed more than 20 instances in which the US Federal Deposit Insurance Corporation (FDIC) has warned banks to refrain from offering crypto-related services.

On November 1, Coinbase's Chief Legal Officer, Paul Grewal, reported that he had received at least 23 FDIC letters urging banks not to engage in crypto-related activities.

The FDIC has been warning banks against Crypto since 2022

Grewal said this discovery was made through the organization's recent Freedom of Information Act (FOIA) request. This initiative aims to examine the FDIC's impact on US banks' use of crypto services and the regulator's role in Operation Chocpon 2.0.

Grewal emphasized the nature of these letters, calling them a “shameful example” of government agencies intent on limiting access to finance for crypto companies. He emphasized the public's right to transparency, not the regulatory body operating “behind the bureaucratic veil.”

The FDIC Von Index has listed a series of communications where the agency is warning banks about the risks associated with crypto. The documents cite concerns around consumer protection, financial stability and institutional safety. In the year As early as March 2022, the FDIC was recommending that some banks suspend operations of new crypto startups pending further reviews on security and compliance.

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Another document from March 2022 documents the FDIC recommending that a bank “pause all crypto-asset-related activity” while evaluating potential security risks associated with crypto services. In another document from September 2022, the FDIC advised a bank to delay offering crypto services to its customers.

Crypto advocates disagree with these findings. Chronicle Labs founder Nicklas Kunkel criticized the FDIC's approach, saying it contradicted earlier claims by Deputy Treasury Secretary Wally Adeyemo.

“Disgraceful and in direct contradiction to the statement made by the Under Secretary to the Treasury, Wali Adeyemo, in August. Having a policy is one thing, lying about your policy is just as silly. Operation Chocpon 2.0 is underway,” Kunkel said.

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Similarly, Mike Belshe, CEO of crypto custodian service provider BitGo, said the agency has learned that the regulator has deliberately blocked traditional financial institutions from serving emerging industries.