Coinbase, the largest cryptocurrency exchange in the United States, has released internal communications from the Federal Deposit Insurance Corp (FDIC) that show a coordinated effort to de-bank the crypto industry. The documents were released after Coinbase sued to get them uncovered.
The documents, which were heavily redacted, show the FDIC pressuring three mid-sized crypto-friendly lenders (Signature, Silvergate and Silicon Valley Bank) to stop offering services to crypto companies following the collapse of FTX and others in late-2022. The FDIC wrote in one of 23 internal letters released by Coinbase, “We respectfully ask that you pause all crypto asset-related activity. The FDIC will notify all FDIC-supervised banks at a later date when a determination has been made on the supervisory expectations for engaging in crypto asset-related activity.”
The FDIC and other regulators have long denied they pressured the three struggling banks to stop banking crypto companies. However, the letters show that this was not just speculation or paranoia from the industry, but a concerted effort by the FDIC to deny banking services to a legal American industry.
Debanking has been a hot issue recently, with mega-VC Marc Andreessen discussing Operation Chokepoint 2.0 on Joe Rogan’s podcast. The House Committee on Financial Services also heard testimony from several crypto leaders this week about difficulties gaining banking services.
The heavily redacted letters show the FDIC demanding onerous compliance information while being unclear as to what was actually required of the banks before they could approve the provision of financial services to the businesses. Some letters even show that the agency wasn’t yet sure what regulatory filings would be required before it could green-light crypto business.
Coinbase plans to petition the court to allow the documents to be released unredacted. Critics argue that financial services are a fundamental right and that the federal government should not be able to effectively outlaw legal businesses. Operation Chokepoint 2.0 is a reference to an official Obama Administration policy that targeted legal businesses deemed “high-risk” by the government.
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