Commerzbank Partners with Crypto FinanceFDIC internal communications and Coinbase documents reveal the U.S. government directed banks to suppress crypto involvement in 2022
Coinbase’s disclosure of these communications highlights how regulatory ambiguity has intensified the conflict between crypto firms and federal banking authorities.
Coinbase obtained the documents through a legal challenge and published them on Friday. The documents consist of letters that direct banks to suspend all cryptocurrency-related activities.
The documents stated, “We respectfully request that you cease all crypto asset-related activities.”
According to reports, the FDIC directives caused banks to postpone or suspend their plans to provide crypto services until they could resolve ambiguous compliance requirements.
CoinDesk initially revealed this information.
The company Coinbase asserts that these communications indicate a concerted effort to limit banking access for legitimate crypto businesses, a practice that some in the industry refer to as “Operation Chokepoint 2.0.”
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The relationship between cryptocurrency and finance is tumultuous.
For years, crypto companies have encountered difficulty in establishing dependable banking partnerships in the United States, citing federal regulators’ vague or excessively cautious guidance.
Banks are hesitant to collaborate with crypto firms because of concerns regarding regulatory compliance, fraud risks, and potential reputational damage.
Many banks refrain from engaging in the sector wholly due to the absence of clear regulations, which presents a substantial obstacle for crypto businesses that depend on traditional banking for their operations.
Letters from the Federal Deposit Insurance Corporation (FDIC) seem to emphasize this dynamic. The agency’s communications suggest that banks had a duty to address complex questions about their proposed crypto activities. These inquiries frequently resulted in the abandonment of banks’ plans or the delay of approvals.
Coinbase executives contend that the absence of formal crypto guidelines enables regulators to implement informal restrictions, thereby effectively isolating the crypto industry from mainstream financial services.
Operation Chokepoint 2.0 was not merely a crypto conspiracy theory, as evidenced by the letters. On X, Coinbase’s CLO, Paul Grewal, stated, “[The FDIC] is still concealing itself behind overly broad redactions.”
Crypto advocates refer to regulatory initiatives to restrict the crypto industry’s access to banking services as Operation Chokepoint 2.0. Critics contend that this method effectively isolates legal crypto businesses from conventional financial infrastructure, thereby stifling their growth.
Paul Grewal via X said :
“Law abiding American businesses should be able to access banking services without government interference. The incoming administration has the opportunity to reverse so many poor crypto policy decisions, chief among them politically motivated regulatory decisions like Operation Chokepoint 2.0.”
