WASHINGTON (Diya TV) — In a recent congressional testimony, Paul Grewal, Chief Legal Officer of Coinbase, highlighted concerns over federal regulators’ actions toward the cryptocurrency industry. Grewal emphasized that the Federal Deposit Insurance Corporation (FDIC) had, since March 2022, sent letters to senior members of financial institutions, directing them to “pause all crypto asset-related activity” without specifying timelines for review.
These letters, obtained through a Freedom of Information Act (FOIA) lawsuit filed by History Associates on behalf of Coinbase, reveal the FDIC’s cautious stance on crypto-related activities. The agency expressed concerns over potential risks associated with cryptocurrencies, including scams, bankruptcies, and market volatility. However, the FDIC did not explicitly instruct banks to cease providing services to crypto companies.
Grewal argued that such directives contribute to a broader “debunking” effort against the crypto industry, potentially setting a precedent that could affect other legal industries. He called for increased transparency and accountability in regulatory practices, urging regulators to approach crypto-related activities with an open mind to foster innovation rather than hinder it.
The FDIC’s actions have drawn parallels to the controversial “Operation Choke Point” from a decade ago, where federal agencies pressured banks to cut ties with certain industries. This has led to bipartisan investigations by the House Financial Services Committee into potential governmental overreach affecting the crypto sector.
In response to these concerns, FDIC Vice Chairman Travis Hill acknowledged the need for a “new approach” toward crypto regulation. He emphasized that regulators should clearly and transparently outline permissible activities and ensure timely action on regulatory approvals, moving away from practices that could be perceived as “debunking” law-abiding customers.
