Coinbase has recently brought to light that the U.S. Federal Deposit Insurance Corporation (FDIC) has been advising banks to avoid offering services related to cryptocurrency.
Through a Freedom of Information Act (FOIA) request, Coinbase uncovered over 20 letters from the FDIC, dating back to March 2022, which express concerns about consumer protection, financial stability, and the security of institutions involved with crypto. This has raised alarms among crypto supporters, who view these warnings as an attempt to hinder the industry’s growth.
Paul Grewal, Coinbase’s Chief Legal Officer, shared his concerns on November 1, labeling the FDIC’s actions as a troubling example of government overreach. He emphasized the need for transparency, especially when regulatory bodies influence such a rapidly evolving sector.
The FDIC’s internal documents reveal a pattern of caution directed at banks regarding cryptocurrency. For instance, in March 2022, the agency advised one bank to stop all crypto-related activities until further safety assessments were conducted. Later, in September 2022, another bank was told to postpone its crypto services due to similar concerns.
Crypto advocates have expressed their frustration with the FDIC’s stance. Niklas Kunkel, founder of Chronicle Labs, criticized the agency for its contradictory approach, arguing that it is hypocritical to maintain a hidden anti-crypto policy while publicly claiming to support innovation.
Mike Belshe, CEO of BitGo, echoed these sentiments, stating that he has long suspected regulators of discouraging traditional banks from collaborating with crypto firms.
These revelations have sparked a broader discussion about the government’s role in the crypto landscape, with many calling for clearer and more supportive policies that foster innovation rather than stifle it.
