Coinbase has recently revealed that the Federal Deposit Insurance Corporation (FDIC) is advising banks to temporarily suspend cryptocurrency-related activities, igniting controversy reminiscent of “Operation Chokepoint.” Critics, including leaders from Coinbase and Ripple, argue that the FDIC’s actions overstep constitutional limits and aim to suppress the cryptocurrency sector.
On January 3, Coinbase’s Chief Legal Officer, Paul Grewal, disclosed that the FDIC had sent letters instructing banks to limit services related to cryptocurrencies, including Bitcoin transactions.
He criticized the lack of transparency surrounding these directives and called for congressional hearings to investigate the FDIC’s motives. Between 2022 and 2023, the FDIC had already directed banks to pause crypto services while it assessed risks and developed guidelines, particularly concerning Bitcoin transactions through third-party partnerships.
Ripple’s Chief Legal Officer, Stuart Alderoty, condemned the FDIC’s tactics, suggesting that the letters were intended to intimidate banks into withdrawing from crypto activities.
Coinbase CEO Brian Armstrong expressed confidence in the judiciary’s ability to address what he deemed unconstitutional actions, emphasizing that regulatory agencies should enforce existing laws rather than create new ones.
The FDIC’s recent actions have reignited concerns about regulatory overreach, with attorney John Deaton calling for a federal investigation. He argued that these measures threaten free-market principles and competition. As criticism mounts, Coinbase and other crypto leaders are preparing for potential legal challenges against what they perceive as unjust regulatory interference.
