US Regulators Advised Banks to Pause Crypto Ventures, No Full Ban
Documents released by Reuters detail the approach of US regulators towards crypto activities in the banking sector. Banks were advised to pause direct crypto ventures during 2022 and 2023 but were not prohibited from serving crypto companies.
The Federal Deposit Insurance Corporation (FDIC) issued supervisory “pause letters” to certain banks following a legal challenge by History Associates Incorporated, which was hired by Coinbase. This disclosure supports Coinbase’s claims of an effort to disconnect crypto businesses from traditional banking.
The letters, made public in December, received attention after a judge ordered the FDIC to release less-redacted versions. A new set of 25 letters, including two previously undisclosed, emphasizes the cautious regulatory stance.
FDIC’s Crypto Pause — No Blanket Ban
The letters indicate that while banks were asked to temporarily refrain from expanding crypto services, there was no overarching directive to cut ties with the sector. Instead, FDIC staff requested banks to pause new initiatives or respond to detailed inquiries prior to proceeding with crypto-related projects.
An internal FDIC memo from 2022 highlights stricter scrutiny for banks directly involved in crypto activities, such as asset custody, compared to those providing standard banking services to crypto firms. It notes “significant safety and soundness risks” associated with crypto ventures, which continue to evolve.
This position aligns with FDIC Chairman Martin Gruenberg's comments in December stating that the agency does not “debank” crypto firms regarding access to bank accounts, but direct engagement by banks remains a focus of supervisory attention.
Congressional Call-Out: Coinbase Demands Deeper Probe
Coinbase's Chief Legal Officer, Paul Grewal, criticized the updated disclosures, calling for a deeper congressional investigation. He argued that the letters reveal “a coordinated effort to stop a wide variety of crypto activity,” suggesting these measures aim to hinder sector growth.
Note that FDIC magically found TWO more pause letters in this search after saying before that it had complied with an earlier Court order. It's hard to believe in their good faith when their sweater further unravels every time we pull on the thread. The new Congress should launch…
— paulgrewal.eth (@iampaulgrewal) January 3, 2025
The timing of these revelations coincides with expectations of a more lenient administration towards crypto regulation. President-elect Donald Trump is anticipated to issue an executive order easing regulatory pressures on the industry shortly after his January 20 inauguration.
Regulators face the challenge of ensuring financial stability while managing risks related to crypto, including scams and volatility. These documents provide insights into how federal agencies navigate this balance, emphasizing caution without outright exclusion.