Newly released documents from the Federal Deposit Insurance Corporation (FDIC) have shed light on alleged efforts by the agency to push banks into cutting services for cryptocurrency firms, a practice critics are calling “regulation through exhaustion.” The disclosure comes just ahead of a U.S. Senate Banking Committee hearing examining the debanking of crypto companies.
Revealing the FDIC’s Role in Crypto Debanking
On Feb. 5, the FDIC released 175 previously undisclosed documents from its Biden-era correspondence. These documents provide further evidence of what has been dubbed “Operation Choke Point 2.0,” a reported effort by regulators to isolate cryptocurrency businesses from traditional banking services.
Following President Trump’s inauguration, a newly appointed, pro-crypto leadership took control of the FDIC and aligned with Coinbase in challenging these alleged debanking practices. In 2024, Coinbase sued the FDIC, leveraging the Freedom of Information Act (FOIA) to obtain internal agency communications with financial institutions. The lawsuit led to the release of heavily redacted “pause letters,” which suggested that regulators were pressuring banks to sever ties with crypto companies without clear justification.
Unlike previous disclosures, the latest batch of documents was released voluntarily by the new FDIC leadership under Chairman Travis Hill, signaling a shift in the agency’s stance.
Documents Detail Regulatory Pressure on Banks
The newly unveiled FDIC documents outline how the agency allegedly pressured banks to halt services for crypto clients, sometimes refusing to respond to inquiries from financial institutions for months. In certain cases, banks that sought clarification or resisted compliance were met with silence or direct orders to suspend all blockchain-related activities.
Paul Grewal, Coinbase’s Chief Legal Officer, reacted to the revelations by sharing key excerpts from the documents on social media. He accused the FDIC of “regulation by exhaustion,” highlighting how the agency’s persistent pressure led banks to cut off crypto firms, even when financial institutions argued that transactions were safe and compliant.
Even when banks reached agreements with the FDIC to maintain limited services for crypto clients, the agency reportedly sought to renegotiate or overturn those agreements to impose broader restrictions. The documents suggest that despite repeated assurances from banks regarding the safety of their crypto-related transactions, the FDIC continued to push for a blanket prohibition.
The agency cited concerns over reputational risks, market volatility, and consumer protection as justification for its actions. However, even after banks complied with demands to stop processing crypto transactions, many clients were still unable to regain full access to traditional banking services.
Unexpected Bipartisan Support Against Debanking
During the Feb. 5 Senate hearing, lawmakers from both parties expressed concerns about unfair denials of banking access, including those targeting cryptocurrency firms.
Notably, Sen. Elizabeth Warren—often regarded as a staunch critic of digital assets—surprised many by calling for an investigation into politically motivated debanking practices. In a letter to President Trump, she expressed her willingness to collaborate with his administration and congressional leaders to address the issue.
According to Warren’s analysis, thousands of cases of unfair debanking have occurred over the past three years, with more than half of the complaints linked to four major financial institutions: Bank of America, JPMorgan Chase, Wells Fargo, and Citigroup. However, her letter notably avoided any direct reference to cryptocurrency, suggesting a broader focus on banking access rather than an explicit endorsement of digital assets.
What Comes Next?
With the FDIC now aligning itself with Coinbase and shifting away from previous anti-crypto measures, the future of banking access for cryptocurrency firms appears poised for change. The bipartisan backlash against debanking policies signals a potential overhaul of regulatory approaches.
According to FDIC Chairman Travis Hill, the agency will “reevaluate [its] supervisory approach to crypto-related activities.” A key element of this reassessment involves replacing Financial Institution Letter (FIL) 16-2022, which required banks to notify the FDIC of any engagement with crypto-related activities and submit them for review. Under the previous administration, such reviews often led to banks severing ties with crypto firms.
Moving forward, the FDIC plans to collaborate more closely with the President’s Working Group on Digital Asset Markets while maintaining its commitment to financial stability and risk management. As regulatory oversight evolves, the relationship between traditional banking and the crypto industry may be on the verge of a significant transformation.
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