Coinbase Reveals Letters Which Exposes FDIC’s Role In Operation Chokepoint 2.0

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As a seasoned analyst with over two decades of experience in financial regulatory compliance and market analysis, I find the recent revelations by Coinbase concerning the FDIC’s role in restricting banking access for crypto companies quite intriguing. The documents obtained through FOIA requests suggest a coordinated effort by federal agencies to suppress the crypto industry, which aligns with the concept of Operation Chokepoint 2.0.

Coinbase, a major U.S. cryptocurrency exchange, has released documents indicating the Federal Deposit Insurance Corporation’s (FDIC) role in limiting banking options for crypto firms. These letters, obtained via a Freedom of Information Act (FOIA) request, imply that in 2022, banks were advised by the FDIC to either stop or reduce services provided to cryptocurrency companies.

The legal team of this exchange claims that these papers show a collaborative attempt by federal authorities to stifle or hinder the growth of the cryptocurrency sector.

Coinbase Exposes FDIC’s ‘Pause Letters’, Proving Role in Crypto Banking Restrictions

Recently, it was disclosed that the FDIC (Federal Deposit Insurance Corporation) had sent “temporary hold letters” to various financial establishments in the year 2022. The purpose of these letters was to ask banks to momentarily suspend activities involving cryptocurrencies while they assessed compliance and risk aspects more thoroughly.

Through a court-ordered investigation, the exchange discovered records that provide insight into the Federal Deposit Insurance Corporation’s (FDIC) initiatives aimed at restricting cryptocurrency companies’ access to traditional banking services.

The “pausing instructions” clearly told banks to halt all transactions involving cryptocurrencies. This move indicates that the regulators are taking a preventive approach, aiming to dissuade financial institutions from participating in the cryptocurrency sector.

Paul Grewal, Coinbase CLO commented,

The revelations concerning Operation Chokepoint 2.0 were not merely baseless speculations about cryptocurrencies. Despite this, the Federal Deposit Insurance Corporation (FDIC) continues to conceal information behind excessive redactions. To date, they have only disclosed a small portion of the documents.

Recently, Coinbase’s Chief Legal Officer, Paul Grewal, disclosed that the Federal Deposit Insurance Corporation (FDIC) is taking steps to limit banks from providing cryptocurrency services.

Operation Chokepoint 2.0 Allegations and Its Impact on Crypto Firms

The disclosure of documents by Coinbase has reignited discussions about “Operation Chokepoint 2.0,” a term used by critics to refer to perceived attempts by the government to suppress the cryptocurrency industry. As stated by Coinbase’s legal team, these letters offer tangible proof of a coordinated plan by the FDIC to restrict crypto companies.

For a while, leaders in the cryptocurrency sector have voiced concerns over their struggle to establish banking connections due to the unpredictability of regulations. These letters indicate that federal bodies have been employing unofficial methods to curtail the industry’s growth.

On the other hand, as per recent updates, US Representative French Hill has pledged to scrutinize Operation Chokepoint 2.0, claiming that it discriminates against sectors such as cryptocurrency through politically motivated debanking. He has advocated for increased transparency in financial regulation and robust safeguards for businesses subjected to unjust regulatory tactics.

Reports indicate that banks have been required to provide comprehensive evaluations, which encompass risk appraisals and projected earnings, prior to initiating cryptocurrency services. This thorough examination and resulting delays were apparently employed as a strategy to deter traditional financial entities from associating with the cryptocurrency industry.

Despite significant blackouts in the documents published by the FDIC, Coinbase remains committed to maintaining transparency. In fact, as Paul Grewal, Coinbase’s legal chief, mentioned, revealing more information would offer further insight into the specific regulatory measures applied within the cryptocurrency sector.

In a similar vein, John Deaton has urged the new U.S. administration to make those who have stopped cryptocurrency companies from accessing banking services, accountable for their actions.

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2024-12-06 22:46