Paul Grewal, the Chief Legal Officer of Coinbase, criticized the Federal Deposit Insurance Corporation’s (FDIC) approach to Freedom of Information Act (FOIA) requests. He pointed out that the FDIC exhibits restrictive practices in its responses to these requests.
Shortcomings in FOIA Requests
Grewal asserted that the FDIC does not conduct full-text searches in its Regional Automatic Document Distribution (RADD) database. He also stated that the agency limits the disclosed data range by rejecting requests for documents stored in collaboration tools like Microsoft Teams.
Coinbase argued that the FDIC marked certain documents as contentious or attorney-client privileged, thus hindering their dissemination. Grewal indicated that at least 150 documents were missing from the FOIA responses, raising concerns about the agency’s accountability.
Concerns Regarding “Pause Letter” Usage
Grewal claimed that the FDIC’s “pause letters,” sent to banks requesting the cessation of services for cryptocurrency clients, are excessively redacted. He pointed out that these documents are protected under FOIA Exemption 8 and are being misused to conceal information that is not confidential.
He highlighted that these letters focus on issues such as crypto lending, stablecoins, and blockchain-based payment systems, noting that banks receive no clarification on the restrictions, which poses legal risks for compliant crypto businesses.
The situation has revived allegations of ‘Operation Choke Point 2.0,’ a term used to describe regulators’ efforts to deny banking services to crypto companies. Critics have claimed that the FDIC and other regulators are covertly pressuring banks to avoid crypto transactions.
Grewal emphasized the need for the FDIC to provide public information, advocating for equal treatment of all industries. He noted that this approach hinders innovation in financial services.
“Considering the increased demand, we will need time to evaluate your communication and present our response.”
FDIC representatives responded accordingly. These developments have raised questions about the crypto industry’s relationship with regulatory bodies and the need for transparency.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.
