FDIC “magically” releases two more pages of documents to Coinbase

Coinbase has secured the release of two additional pages of documents from the Federal Deposit Insurance Corporation (FDIC) after a prolonged legal battle over its Freedom of Information Act (FOIA) requests. These newly released documents, referred to as “pause letters,” show that the FDIC had advised U.S. banks to halt activities related to cryptocurrencies, effectively limiting the involvement of financial institutions with crypto businesses in 2022. This move has raised concerns about the regulatory environment for the crypto industry in the U.S.

The disclosure of the documents highlights what some are calling “Operation Chokepoint 2.0,” which refers to a series of actions by U.S. regulators aimed at restricting the flow of banking services to crypto companies. The name “Operation Choke Point” originally referred to a 2013 initiative by the U.S. Department of Justice that targeted financial institutions dealing with industries deemed high-risk, such as payday lenders and firearms sellers. The term now appears to be applied to the ongoing regulatory pressure on the crypto industry.

Coinbase’s Chief Legal Officer, Paul Grewal, shared the documents on social media, expressing frustration over the FDIC’s handling of the matter. He noted that the FDIC had previously claimed compliance with earlier court orders, only for two more letters to “magically” appear later. Grewal criticized the FDIC’s lack of transparency and questioned their good faith in the matter, stating that every time they sought to pull on the thread, the situation became more complicated.

The release of these documents comes after a December 2024 ruling by Judge Ana C. Reyes, who criticized the FDIC for excessive redactions and noncompliance with earlier court orders. She instructed the agency to make more careful redactions and release additional documents. The FDIC complied by disclosing two previously undisclosed letters, adding to the ongoing debate about regulatory clarity and the role of federal agencies in regulating the crypto space.

The newly released letters show that U.S. banks were asked to pause all activities related to crypto assets, which led to delays in launching crypto-related services and further complicating compliance requirements. This situation has sparked discussions on the need for greater regulatory clarity for the crypto industry. Some members of the crypto community are hoping that a potential change in U.S. leadership, particularly under a hypothetical Donald Trump presidency, could lead to a shift in regulatory approaches from agencies like the FDIC and the Securities and Exchange Commission (SEC).

In response to the situation, Grewal suggested that the new Congress should launch hearings to investigate the actions of regulatory agencies without delay, emphasizing the importance of ensuring transparency and fairness in the treatment of the crypto industry.