Crypto's Big Comeback? FDIC Makes a U-Turn

The esteemed FDIC, guardians of our financial well-being, have been known to send out rather stern letters to banks, urging them to distance themselves from those pesky crypto firms.
But hold on to your hats, dear reader, for the current acting FDIC chair, Mr. Travis Hill, has decided to embrace a new approach. It seems the winds of change are blowing through the halls of regulation.

This sudden shift in attitude comes amid the ongoing U.S. Senate hearings on the alleged de-banking of crypto firms – a situation that has caused quite a stir, as you might imagine.

In a surprising turn of events, Mr. Hill has released a trove of 175 supervisory documents sent by the FDIC to crypto firms. These documents shed light on the infamous “Operation Chokepoint 2.0,” a campaign aimed at restricting banking access for crypto companies.

But fear not, for Mr. Hill has declared that a more nuanced approach will be taken from this point forward.

“We are, shall we say, reconsidering our approach to crypto-related activities. This includes, with a touch of regret, retiring Financial Institution Letter (FIL) 16-2022. We are also paving a new path for institutions to engage in crypto- and blockchain-related activities while still adhering to, well, the usual safety and soundness principles.

This infamous FIL 16-2022, issued in the spring of 2022, was designed to manage risks related to third-party banking relationships, especially those pesky payment processors and fintech firms, including, of course, crypto.

Crypto’s De-banking Victims Speak Out

While the media has been abuzz with the de-banking saga, the issue truly gained traction after renowned venture capitalist Marc Andreessen brought it to the attention of the masses, you know, during the Joe Reagan Experience podcast.

This sparked the interest of policymakers, and with the new administration in place, things began to move at a pace that would make even a hummingbird blush. On the 5th of February, the U.S. Senate Committee on Banking held its first meeting with the de-banked victims – those brave souls who had been cast out of the traditional banking system.

Nathan McCauley, founder and CEO of Anchorage Digital, a company that provides institutional crypto platforms, was among those who shared their experiences.

Mr. McCauley noted that his company and other crypto ventures he invested in had faced significant challenges in maintaining bank accounts.

“I have a sneaking suspicion that regulators put pressure on banks to cut off services to the crypto industry. Why do I think this? Two things: a series of anti-crypto regulatory actions between 2021 and 2023, and my own, personal, harrowing experience.

Paul Grewal, the legal chief of Coinbase, was surprised, perhaps even shocked, to learn that the FDIC’s de-banking push against crypto firms was linked to, gasp, Bitcoin‘s volatility and compliance risks, and not, as previously asserted, a “systematic risk” to the overall U.S. banking system.

2025-02-06 16:11

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