Key Takeaways
- The FOIA requests found the regulators were requesting banks to stop providing crypto-asset services to customers.
- Coinbase has previously sued the SEC for failing to comply with a 2023 request.
- “Operation Chokepoint 2.0” is a conspiracy theory that alleges the government and traditional finance are working to constrict crypto by restricting fiat on/off/ ramps.
In pursuit of regulatory clarity in the U.S., crypto exchange Coinbase has unveiled some uncomfortable information following two Freedom of Information Act (FOIA) requests against regulators.
Seemingly, the results indicate that U.S. regulators were actively advising banks to restrict crypto-banking services.
“Refrain” from Crypto
As per Coinbase’s Chief Legal Officer (CLO), Paul Grewal, Coinbase has unearthed “more than 20 examples” of the U.S. Federal Deposit Insurance Corporation (FDIC) telling banks to “refrain from providing” crypto-banking services.
As per the published, though not complete, FOIA responses, it seems that the FDIC was in talks with several banks that were exploring or engaging in crypto-asset activities.
Upon inspection, the FDIC seemed to request that they “pause” or “not proceed” with providing such services.
The requests come as part of a now-unraveling crypto conspiracy theory known as “Operation Chokepoint 2.0,” which alleges the government and legacy finance are working to restrict crypto’s access to fiat on/off ramps and essentially squash it.
Grewal hints that there is more to come and says that in the meantime, they will continue to push for regulatory clarity via “FOIA requests and any other means necessary.”
Coinbase Seeks Clarity
The exchange fired two FOIA requests at the FDIC in late October, seeking a better understanding of crypto regulations and how regulatory agencies have handled FOIA requests themselves.
The first request seeks all documentation on the digital asset deposit cap allegedly imposed on financial institutions by the FDIC and other banking regulators.
The request asserts that a 15% deposit cap was placed on firms such as Silvergate Bank, Signature Bank, Cross River Bank, and others.
It is seeking all logs and communications exchanged between the Treasury’s Office of the Comptroller of the Currency (OCC), its staff, officials, and FDIC board members.
Coinbase also requested that the FDIC provide a full explanation if it wishes to invoke exemptions or withhold information.
The exchange’s second FOIA request sought to understand how regulators responded to previous crypto-related FOIA requests.
Coinbase requested FOIA logs from Jan. 1, 2022, to Oct. 1, 2024.
In assessing the flow of FOIA requests, the exchange may be looking for trends and discrepancies in how financial watchdogs treat crypto-related information.
“In short, so long as the government will not relent, neither will Coinbase,” Paul Grewal, Coinbase’s Cheif Legal added.
Coinbase is on the frontlines of many battles against U.S. regulators and lawmakers and has been locked in legal tussles since 2022.
Battle On
Coinbase has been in staunch opposition to the U.S. Securities and Exchange Commission (SEC) for quite some time.
Notably, the exchange took the SEC to court in June for failing to comply with a June 2023 FOIA request for public disclosures.
Specifically, Coinbase sought information on the SEC’s decision-making process regarding the classification of Ethereum (ETH) as an asset. It coincided with the SEC suing Coinbase for allegedly violating securities laws with ETH staking services.
In a separate case, Coinbase is also suing the SEC over what it views as aggressive and arbitrary crypto regulations, accusing the regulator of not providing clear rules and regulations to adhere to.
They’ve even requested access to the emails of SEC chair Gary Gensler.
Naturally, the exchange has been throwing its weight behind political candidates ahead of the U.S. presidential election alongside Ripple (XRP) and other crypto entities.
Notably, this includes being part of political action committees (PACs) that are financing pro-crypto candidates and politicians.
Eddie is a gaming and crypto writer at CCN. Covering the often weird and wonderful world of Web3 with an adoring, but skeptical eye.
Prior to CCN, Eddie has spent the past seven years working his way through the crypto, finance, and technology industry. He began with PR and journalism with Bitcoin PR Buzz and BitcoinNews.com, eventually working his way to become a copywriter with a dozen firms, including the likes of Polkadot before returning to journalism in 2023.
Having studied Radio production and journalism at University in the UK, Eddie spent a few years making podcasts and presenting on a local London radio station as he built up his writing chops.
A lifelong skateboarder, Eddie can often be found at the skatepark or touring the streets looking for something new to try. That, or kicking back playing JRPGs on his original PSP.
