FDIC resists transparency on crypto’s Operation Chokepoint 2.0 — Coinbase CLO

The Federal Deposit Insurance Corporation (FDIC) is not transparent regarding its role in Operation Chokepoint 2.0, a period when crypto and tech firms were allegedly denied banking services under the Biden administration, according to Coinbase’s chief legal officer, Paul Grewal.

In a March 8 X thread, Grewal called out the agency for repeatedly refusing to provide details about how it ensured that no documents related to the crackdown were destroyed.

“One of our requests concerns FDIC’s representation in a hearing before the Court that the agency had conducted ‘due diligence’ to ensure that no documents were destroyed,” Grewal wrote. 

According to Grewal, Coinbase had asked the FDIC to provide an example of the due diligence it conducted, but the agency failed to do so and took issue with the request to explain its assertion to the court.

FDIC’s document redactions raise concerns

Grewal went on to criticize the FDIC for redacting large portions of documents related to the agency’s handling of crypto-related banking policies.

“In response to our requests for FDIC guidance or policies on processing FOIA requests, directly relevant to our policy-or-practice claims, the agency has produced only snippets from a few documents that have little to nothing to do with the specific FOIA policies or practices that History Associates has challenged in its amended complaint. What exactly are they hiding?” he questioned.

The attorney also mentioned that 53 pages of documents were fully redacted, while many others were heavily censored to the point of being “unintelligible.” When Coinbase asked for an explanation, the FDIC reportedly refused to provide one for most of the redacted material.

He shared a court filing of Coinbase’s plea to the courts to suspend a period the FDIC was given to answer to an amended complaint of unlawful FOIA practices, on February 12.

*History Associates respectfully suggests that the Court should dissolve the stay in this case, order a deposition on specific issues the FDIC has refused to address, and require the agency to respond to History Associates’ amended complaint so that litigation of the claims can proceed expeditiously,” the filing stated.

Concluding his thread, Grewal called on lawmakers, including Senator Tim Scott, Representative French Hill, Senator Kirsten Gillibrand, and Representative Ritchie Torres, to “check” if the FDIC’s actions are any different from those of the previous administration under FDIC Chairman Martin Gruenberg.

OCC eases banking restrictions on crypto

Grewal’s comments come against the backdrop of a Washington crypto summit, where President Donald Trump vowed to end restrictions on crypto firms’ access to banking services.

Speaking at the White House Crypto Summit, Trump reckoned that he was “ending Operation Chokepoint 2.0.” 

“My administration also is working to end the federal bureaucracy’s war on crypto, which was really going on pretty wildly during Biden,” Trump said.

As reported by Cryptopolitan, after the White House Crypto Summit, the Office of the Comptroller of the Currency (OCC) updated its guidelines for financial institutions serving cryptocurrency companies. 

The new policy grants banks greater autonomy in assessing and mitigating risks related to crypto services, reversing prior restrictions that required regulatory pre-approval.

“The OCC expects banks to have the same strong risk management controls in place to support novel bank activities as they do for traditional ones,” said Acting Comptroller of the Currency Rodney E. Hood in a statement. 

“Today’s action will reduce the burden on banks to engage in crypto-related activities and ensure that these bank activities are treated consistently by the OCC, regardless of the underlying technology.”

The updated guidance eliminates a requirement from the OCC’s previous Interpretive Letter #1179, issued in November 2021, which mandated that banks obtain pre-approval before offering crypto-related services such as custody, stablecoin payments, or distributed ledger transactions. 

Now, banks can independently decide how to engage with the digital asset industry without direct regulatory authorization.