25 letters from the United States Federal Deposit Insurance Corporation (FDIC) came to light to confirm that the regulatory agency, starting in 2022, ordered banks to stop their activities with bitcoin (BTC) and other cryptocurrencies. The documents confirm long-held suspicions within the digital assets industry that federal regulators had coordinated to block banks’ free access to digital assets.
“We respectfully ask that you pause all activity related to cryptoassets«Reads one of the letters shared yesterday by Paul Grewal, legal director of Coinbase. The documents also said: “The FDIC will notify all supervised banks at a later date when a determination has been made regarding supervisory expectations for engaging in activities related to cryptoassets.”
Grewal noted that Coinbase initially had access to 23 letters from the FDIC, following a court order in June following a lawsuit against the FDIC and the Securities and Exchange Commission (SEC). And the agency recently found “magically TWO more pause letters” in a new search, which for the lawyer is a sign that the regulatory agency is not acting in good faith.
“It should be noted that the FDIC magically found TWO more pause letters in this search after previously saying it had complied with a previous court order. It’s hard to believe in your good faith when your sweater falls apart even more every time you pull the thread. “The new Congress should begin hearings on all of this without delay.”
Paul Grewal, Chief Legal Officer at Coinbase.
The lawyer invited him to read the 25 letters that for him “show a coordinated effort to stop a wide variety of crypto activitiesfrom basic BTC transactions to more complex offerings,” such as he wrote it in messages on social network X.
What Grewal calls a concerted effort is what the industry classifies as Operation Checkpoint 2.0 or “Choke Point,” which has been denounced as a covert operation to prevent digital assets like bitcoin from interacting with the traditional financial system.
For other industry players, Checkpoint 2.0 means “a shot in the back” by Joe Biden’s government to marginalize the cryptocurrency industry. As previously reported by CriptoNoticias, this is what Chris Lane, former CTO of Silvergate, expressed when sharing his reflections after having worked at the most crypto-friendly US bank.
In March 2023, Silvergate Capital Corporation announced the closure of its cryptocurrency payments network. At the time it was said that due to a risk-based decision, they dismantled the bank’s operations. For him it was a terrible experience that ended with the definitive closure of a bank which, according to him, was solvent and liquid.
Caitlin Long, CEO of Custodia Bank and vocal critic of Operation Choke Point 2.0, commemorated the anniversary from the blocking maneuvers of banks to cryptocurrencies. According to Long, on November 27, 2022, just the Sunday after Thanksgiving, the Federal Reserve initiated regulatory actions against five banks for their cryptocurrency-related activities. This action, which marked the beginning of an alleged “choke” campaign against pro-bitcoin bankingspread throughout the following work week.
Long said Custodia Bank was one of the banks affected. “The other 4 banking entities no longer exist or have reduced or abandoned their activities related to cryptocurrencies, thus displacing many innocent clients,” he explained, emphasizing that this was not an isolated action, but a coordinated operation between the three main federal banking agencies (Fed, FDIC and OCC).
Additionally, Long linked these events to the collapse of FTX, which occurred in November 2022, suggesting that the bankruptcy of this cryptocurrency exchange could have catalyzed the regulatory offensive. “FTX was central to this,” he said, providing a detailed temporal context of the internal Fed meetings and decisions that led to the denial of Custodia Bank’s request for access to the Fed’s payments system.
“Fortunately, the administration Trump and Congress have the opportunity to right these wrongs and expose the truth,” said Faryar Shirzad, CEO of Coinbase. His comment joins others who show optimism about the possibility of a more favorable regulatory environment for bitcoin and other digital assets emerging, thanks to Donald Trump’s government.
