The U.S. Federal Deposit Insurance Corporation has issued instructions to banks to limit or cease services for cryptocurrency operators. Coinbase has criticized these actions as attempts to block crypto firms from accessing banking services.
FDIC Actions
The Federal Deposit Insurance Corporation, a prominent banking regulator, issued warnings throughout 2022 and into 2023, perceived by many as attempts to sever ties between cryptocurrency and traditional finance. This revelation followed a request by Coinbase to disclose the FDIC's internal communications on the matter. Under court order, the FDIC released redacted documents, which included internal guidelines on approaching banks dealing with cryptocurrency companies. An internal FDIC memo distinguishes between banks holding cryptocurrency assets, meriting heightened supervision, and those providing traditional services, like deposit accounts and loans, to crypto clients.
Response from Coinbase and Lawmakers
Coinbase’s legal chief, Paul Grewal, criticized the FDIC's actions, arguing that the agency is deliberately limiting the crypto industry's access to banking services. In response, U.S. lawmakers are taking steps to address growing concerns. Representative French Hill stated he would evaluate potential regulatory overreach by agencies like the FDIC for possible reforms.
Motives and Impact of FDIC Decisions
The Federal Deposit Insurance Corporation asserts that it aims to mitigate risks associated with crypto activities, which it views as a growing threat to financial stability and consumer protection. It emphasizes that it is not trying to "debank" crypto firms but remains concerned about banks' direct cryptocurrency engagements.
The FDIC's new order of interaction with cryptocurrency operators has sparked mixed reactions. While some believe the measures will help control risks, others argue they threaten industry growth.
