A U.S. bank regulator instructed banks in 2022 and 2023 to pause direct involvement in cryptocurrency but did not order them to cease providing banking services to crypto companies, according to documents released on Friday.
The Federal Deposit Insurance Corporation (FDIC) disclosed supervisory “pause letters” following a lawsuit by History Associates Incorporated, a research firm hired by crypto exchange Coinbase.
The judge ordered the FDIC to resubmit the letters with more nuanced redactions after the agency’s initial December release. The updated collection includes 25 letters, two more than the original submission.
Coinbase, as part of a campaign to highlight alleged discrimination against crypto firms, has argued these documents reveal efforts by regulators to isolate crypto companies from traditional banking.
Paul Grewal, Coinbase’s chief legal officer, commented on X that the less redacted letters demonstrate a “coordinated effort to stop a wide variety of crypto activity” and urged Congress to investigate further. In an attempt to address these claims, the FDIC released a 2022 internal memo detailing supervisory guidelines for banks exploring crypto ventures.
The newly released documents reveal FDIC’s cautious stance toward the volatile crypto industry but stop short of requiring banks to sever ties with the sector entirely. Some letters direct banks to pause or limit their crypto-related activities, while others request comprehensive answers from banks before allowing crypto-related expansions.
The internal memo highlights distinctions between direct crypto involvement, such as custody services, and traditional banking services like deposits or loans for crypto firms. Stricter scrutiny applies to the former, while the latter remains permissible with oversight.
FDIC Chairman Martin Gruenberg previously stated that the agency does not “debank” crypto firms but monitors banks’ direct involvement in crypto activities as part of its supervisory responsibilities. The memo also notes that crypto-related activities pose risks to safety, soundness, and financial stability, which are “still evolving.”
These developments come ahead of President-elect Donald Trump’s expected policy overhaul, which could include an executive order easing restrictions on crypto-related banking as early as January 20.
