FDIC Urged Banks to Halt Crypto Activities | Airdrop Alert Pro

Coinbase has disclosed the latest information about the Federal Deposit Insurance Corporation (FDIC) restricting banks from participating in cryptocurrency activities.

The revelations sparked criticism of U.S. regulators and sparked accusations of a new round of Operation Choke Point 2.0.

FDIC’s Cryptocurrency Directive Has Similarities to Operation Choke Point

On January 3, Coinbase Chief Legal Officer Paul Grewal revealed more information FDIC sends letter urging banks to scale back cryptocurrency-related operations. Grewal said the letters, which cover everything from Bitcoin exchanges to advanced crypto services, are part of a broader effort to clamp down on the crypto industry.

“Please note that the FDIC miraculously uncovered two additional cease and desist letters during this search, after they had previously stated that they had complied with earlier court orders. Every time we pulled the thread, their sweaters unraveled further, and very quickly It’s hard to believe their sincerity. The new Congress should hold hearings on all of this immediately,” Grewal said.

The documents show that between 2022 and 2023, the FDIC directed certain banks to cease any cryptocurrency-related products until the agency can assess potential risks and finalize regulatory guidance. One letter specifically raised concerns about: Bitcoin trading Facilitating through third-party partnerships, banks are advised to suspend such activities pending further guidance.

“The proposed product is clearly an avenue for bank customers to engage in crypto-asset activities, specifically Bitcoin trading, through third-party arrangements. However, at this time, the FDIC has not determined what regulatory filings, if any, banks will need to make to engage in such activities. Therefore, We respectfully ask that you suspend all crypto-asset related activities.” point out.

Stuart Alderoty, Ripple’s chief legal officer, emphasized that these FDIC orders appear to be aimed at preventing banks from engaging in any cryptocurrency-related business. He highlighted the unusual tactic of addressing bank boards directly, explaining it as a move intended to create a chilling effect.

“These letters send a message: shut down everything crypto-related as soon as possible – not just the products and services mentioned. Writing directly to the board is a rare and well-thought-out step. The purpose of these letters is to shockwaves,” Alderotti claim.

indeed, Coin library Chief executive Brian Armstrong hinted at further legal action and expressed optimism about judicial intervention to address these regulatory overreaches. He said the FDIC’s actions were unconstitutional and that regulators should be enforcing existing laws rather than trying to create new ones.

“Regulators should be enforcing the law, not trying to bypass Congress and make their own laws. The Constitution says only Congress can make laws! So in fact these actions are unconstitutional and illegal. I look forward to the judge weighing in on this,” Armstrong explain.

In the meantime, the FDIC’s actions have reminded many that “Operation Choke Point”, the program targets certain industries by exerting indirect pressure on financial institutions. A recent survey revealed Cryptocurrency-focused companies face tough banking challengesUnlike other industries such as real estate or private credit, these industries have not reported similar problems.

Attorney John Deaton volunteered to lead the federal investigation into the situation. He believes that this wave of regulatory pressure has exceeded the limit and is a direct challenge to free market principles.

“It is becoming increasingly clear that ChokePoint 2.0 is more than an isolated issue of regulatory overreach. It is a direct attack on the principles of American free market capitalism. At its heart, our economic system depends on open competition, innovation and Equal opportunity, rather than relying on regulators to quietly pick winners and losers.” point out.