- FDIC issued several pause letters to banks engaging with crypto firms during the Biden Administration.
- Current acting FDIC chair Travis Hill, has signalled a U-turn from the de-banking approach.
The U.S. Federal Deposit Insurance Corporation (FDIC) has signaled a pro-crypto shift amid the ongoing U.S. Senators’ hearing on the alleged de-banking of crypto firms during the Biden Administration.
Additionally, the acting FDIC chair, Travis Hill, released 175 supervisory documents sent by the regulator to crypto firms, highlighting the massive banking access restriction famously dubbed ‘Operation ChokePoint 2.0 (OCP).’
However, Hill noted that a more measured approach would be adopted, going forward.
“We are actively reevaluating our supervisory approach to crypto-related activities. This includes replacing Financial Institution Letter (FIL) 16-2022 and providing a pathway for institutions to engage in crypto- and blockchain-related activities while still adhering to safety and soundness principles.”
Here, FIL 16-2022 refers to FDIC’s guidance issued in April 2022 to manage risks linked to third-party banking relationships. Especially payment processors and other fintech firms, including crypto.
Crypto de-banking victims testify
Although crypto media has extensively covered OCP in the past, the issue went mainstream after renowned venture capitalist Marc Andreessen voiced it on the Joe Reagan Experience podcast.
This got the attention of policymakers, and with the new Trump Administration, things began moving fast. On the 5th of February, the U.S. Senate Committee on Banking held its first meeting with de-banked victims.
Nathan McCauley, founder and CEO of institutional crypto platform Anchorage Digital, was among the crypto execs who testified about their experience.
McCauley noted that his firm and other crypto ventures he invested in struggled to have bank accounts as they were shut down during the period.
“I believe that regulators pressured 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 to 2023, and my own lived experience.”
For his part, Paul Grewal, Coinbase’s legal chief, was surprised that the FDIC’s de-banking push against crypto firms was linked to Bitcoin volatility and compliance risks and not a “systematic risk” to the overall U.S. banking system, as previously purported.
