Coinbase has revealed letters from the Federal Deposit Insurance Corporation (FDIC), advising banks to temporarily halt operations involving crypto assets. According to CoinDesk, such requests began in March 2022.

Re: the letters that show Operation Chokepoint 2.0 wasn't just some crypto conspiracy theory. @FDICgov is still hiding behind way overbroad redactions. And they still haven't produced more than a fraction of them. But we finally got the pause letters: https://t.co/Me41BXpbdF…
— paulgrewal.eth (@iampaulgrewal) December 6, 2024

The largest U.S.-based cryptocurrency exchange filed a lawsuit in June against the SEC and FDIC, accusing them of attempting to “disconnect” the crypto industry from banking services. Coinbase claims these regulatory actions violate the Freedom of Information Act (FOIA), which grants public access to official documents.

FDIC Letters

As part of the case, “suspension letters” were disclosed. One such letter, dated March 2022, stated:

“FDIC has not yet determined what regulatory requirements may be necessary for banks engaging in such operations. Therefore, we strongly recommend suspending all activities related to crypto assets.”

Coinbase Chief Legal Officer Paul Grewal described the initiative, dubbed “Operation Choke Point 2.0,” as a reality, not a conspiracy theory.

Between March 2022 and May 2023, the FDIC issued similar letters while also requesting documents from banks related to crypto activities, including cost-benefit analyses, marketing materials, and risk disclosures.

Context

The term “Operation Choke Point 2.0” refers to a 2013 U.S. Department of Justice initiative aimed at limiting banking services for “high-risk” industries, such as payday lenders and firearms dealers. Crypto industry leaders argue that similar tactics are now being used against digital assets.

Congressman French Hill expressed concern over the debanking of crypto firms, asserting that law-abiding American businesses should not face government-imposed barriers to financial services.

Next Steps

Coinbase plans to pursue access to fully unredacted versions of the letters, asserting that much of the disclosed documents have been heavily edited, making their content difficult to interpret. A company representative commented:

“It feels like reading a secret CIA plan. However, these are merely letters from a financial regulator sent to banks. Even the unredacted parts are revealing enough to indicate the extent of the issue.”

Industry Support

In March, the Crypto Innovation Council, venture firm Paradigm, the U.S. Chamber of Commerce, and several other organizations supported Coinbase’s demand for the SEC to establish clear rules for digital assets.