Cryptocurrency Firms Claim US Government is Secretly Waging War on Crypto
Newly disclosed correspondence between the Federal Deposit Insurance Corporation (FDIC) and member banks has sparked fresh claims that the US government is secretly waging a war on cryptocurrency.
What do the documents reveal?
The FDIC published 23 letters it sent to member banks about crypto in 2022, in compliance with a request filed by Coinbase under the Freedom of Information Act (FOIA).
The letters, which are heavily redacted, show how the FDIC instructed banks considering crypto-related products and services to refrain from offering those activities until the agency determined how to properly regulate them.
The FDIC’s Instructions
In March 2022, the FDIC instructed one bank to “pause all crypto asset-related activity.”
The letters reveal that the FDIC made several such appeals to banks across the United States in 2022.
Cryptocurrency Firms React
Coinbase’s chief legal officer, Paul Grewal, celebrated the revelations, arguing that they constituted proof of the existence of “Operation Chokepoint 2.0” – a long-held theory among crypto leaders that the US government has not just discouraged major financial institutions from dealing in crypto for years, but has also debanked crypto companies and executives as a means to strangle the industry.
Dispute over Debanking
A source familiar with the company’s thinking told Decrypt that while the FDIC letters did not explicitly mention debanking, it could be reasonably concluded that banks concerned about following the agency’s instructions to halt “crypto-related activities” might have frozen the accounts of crypto companies and executives, to proactively ensure they did not get into trouble or lose FDIC backing.
“Think about the uncertainty those banks must have felt when receiving those letters,” the source said.
Conclusion
The revelation of the FDIC’s instructions to banks has sparked fresh claims that the US government is secretly waging a war on cryptocurrency. While the FDIC’s letters do not explicitly mention debanking, the uncertainty and potential risk of losing FDIC backing could have led banks to freeze the accounts of crypto companies and executives.
FAQs
Q: What is Operation Chokepoint 2.0?
A: Operation Chokepoint 2.0 is a long-held theory among crypto leaders that the US government has not just discouraged major financial institutions from dealing in crypto for years, but has also debanked crypto companies and executives as a means to strangle the industry.
Q: What is the purpose of the FDIC’s instructions to banks?
A: The FDIC’s instructions were intended to ensure that banks properly regulated and managed the risks associated with crypto-related activities.
Q: What is the current state of the crypto industry?
A: The crypto industry is still reeling from the effects of the 2022 market crash, and the revelation of the FDIC’s instructions to banks has sparked fresh concerns about the potential for further regulation and constraint.
Q: What is the impact of the FDIC’s instructions on the crypto industry?
A: The FDIC’s instructions have created uncertainty and potential risk for crypto companies and executives, which could lead to further regulation and constraint in the industry.
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