Barrons reported that on Feb. 5, the Federal Deposit Insurance Corporation, or FDIC, is planning to update its guidelines regarding banks who engage in crypto related activities.
Changes would enable banks to take part in some crypto-related activities, without the need for prior approval from regulators. Some banks reportedly met with government officials in order to promote the idea of offering crypto-custody services, and to explore tokenized deposit as an alternative to stablecoins.
The tokenized deposits may integrate the checking account with blockchain technology. This would signal a move to adapt banking infrastructures to the changing digital asset landscape.
Documents related to the pause letter
The FDIC published 175 documents on Feb. 5 relating to the oversight it provides to banks that are involved or seek to be engaged in crypto-services. This reflects a change in FDIC’s attitude.
These documents are for the year 2022 “pause letters,”The FDIC issued a warning to 24 institutions to stop or refrain from offering services related to cryptography.
Travis Hill, acting chair of the FDIC said in a press release:
“Our decision to release these documents reflects a commitment to enhance transparency, beyond what is required by the Freedom of Information Act (FOIA), while also attempting to fulfill the spirit of the FOIA request.”
Coinbase submitted a FOIA request on 18th October, seeking clarification on alleged restrictions on banks that accept crypto. FDIC responded to the request by December 2024. However, the documents had been heavily redacted. A less Deleted Version Published on January 3,
Paul Grewal, the chief legal officer at Coinbase, said that regulators retained information as two additional letters were present in the documents.
The 5th February is a X You can post a comment below.He reiterated his allegations and claimed that the FDIC had been a fraudulent institution.The s More pause letters can be hidden.
FDIC resists –
Hill assesses that documents revealed that bank requests for crypto-related services are evident “were almost universally met with resistance,” As the FDIC requested more information over and over again, but remained silent throughout months.
Then he added:
“Both individually and collectively, these and other actions sent the message to banks that it would be extraordinarily difficult — if not impossible — to move forward. As a result, the vast majority of banks simply stopped trying.”
Grewal highlighted pieces of the FDIC-shared documents he thought showed the banks folding under the pressure of the regulator’s threats. The FDIC, he said, often pressures banks to perform a “regulation by exhaustion.”
In this tactic, the bank sent a first letter to ask for clarifications and urge an immediate interruption of crypto-related services. The regulator put the requests on hold after the bank responded to the FDIC’s request. This led the bank abandoning its crypto-related service.
Documents show that the FDIC’s decision to stop services was based on the FDIC’s concern about BTC volatility, consumer protection risks, and the FDIC’s reputation.
Caitlin Lang, CEO and founder of Custodia Bank Why you should be aware multiple instances in the released documents, including FDIC officials’ internal chats, where the word “deposit”It was said.
Long said that deposit was a word used for deposits denominated in US Dollars. One of the chats she evaluated as an official order to stay away from receiving crypto firm deposits was a piece from one of these documents.
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