WASHINGTON, Jan 3 (Reuters) – Newly released documents from the U.S. Federal Deposit Insurance Corporation (FDIC) provide insight into the agency’s stance on banks’ engagement with the cryptocurrency sector. The documents, including supervisory “pause letters” and internal memos, reveal that while the FDIC advised banks to proceed cautiously, it did not issue blanket orders preventing them from providing banking services to crypto companies.
The documents were made public following a judge’s order in response to a lawsuit filed by Coinbase (COIN.O), a cryptocurrency exchange, through History Associates Incorporated, a research firm. Coinbase and other crypto firms allege that U.S. bank supervisors have engaged in a concerted effort to restrict crypto companies’ access to the traditional financial system.
The initial release of the letters in December was followed by a court order for a more nuanced redaction, resulting in a second batch of 25 letters, including two previously unreleased documents. Coinbase’s chief legal officer, Paul Grewel, commented on the released documents on X, stating they showed a “coordinated effort to stop a wide variety of crypto activity” and called for further Congressional investigation.
To counter these claims, the FDIC also released a 2022 internal memo outlining how supervisors should evaluate inquiries from lenders. The memo distinguishes between banks directly engaging in crypto activities, such as holding crypto assets, and providing standard banking services to crypto clients, these services include lending and deposit accounts. The former category is subject to stricter scrutiny.
The internal memo aligns with comments made by FDIC Chairman Martin Gruenberg in December. He clarified that the agency does not “debank” crypto firms regarding access to bank accounts, but direct crypto engagement by banks is a “subject of supervisory attention.”
The memo emphasizes that “Crypto-related activities may pose significant safety and soundness and consumer protection risks, as well as financial stability concerns,” noting that these risks are “evolving.”
The release of these documents comes weeks before the anticipated unveiling of a broad crypto policy overhaul by the incoming administration of President-elect Donald Trump. Trump is expected to issue an executive order instructing bank regulators to adopt a more lenient approach towards the sector, potentially as early as his January 20 inauguration. The FDIC letters show they have instructed banks to pause or limit their expansion of crypto services. In some cases, banks were required to provide detailed responses before continuing with crypto ventures.
