US regulator warned banks on crypto but did not order halt to business
Technology
US regulator warned banks on crypto but did not order halt to business
WASHINGTON (Reuters) - A US bank regulator told banks to pause dabbling directly in crypto in 2022 and 2023, but did not order them to stop providing banking services to crypto companies contrary to industry complaints of widespread "debanking," according to documents released on Friday.
A judge ordered the Federal Deposit Insurance Corporation to provide versions of supervisory "pause letters", it sent to unidentified banks after History Associates Incorporated, a research firm hired by crypto exchange Coinbase, sued the agency to release them.
The FDIC first released the letters in December but was ordered by the judge to resubmit them with more "nuanced redactions." The new batch of 25 letters includes two additional letters sent to unidentified banks that were not included in the original FDIC submission.
The litigation is part of a campaign by Coinbase to expose what it and other crypto companies say has been a concerted effort on the part of US bank supervisors to choke off crypto companies from the traditional financial system.
Coinbase's chief legal officer, Paul Grewel, said in a post on X Friday that the less redacted letters show a "coordinated effort to stop a wide variety of crypto activity" and called for further investigation by Congress.
In a bid to combat those claims, the FDIC also on Friday published a 2022 internal memo detailing how supervisors should assess queries from lenders looking to directly deal in crypto assets, versus offering banking services to crypto companies.
Together, the documents provide a rare glimpse into the confidential bank supervisory process. They suggest that while FDIC examiners have been cautious towards the crypto sector, which has been beset by scams, bankruptcies and volatility, they did not order banks to entirely cut off the crypto sector.
The documents are being released weeks before President-elect Donald Trump's incoming administration is expected to outline a broad crypto policy overhaul. Trump is expected to issue an executive order directing bank regulators to go easier on the sector, potentially as early as his Jan. 20 inauguration.
