This week, Congress is busy holding hearings on Debanking and other nefarious actions taken by federal regulators targeting the digital asset sector during the Biden Administration. Crypto firms have struggled in the US to gain regulatory clarity from the government, which sought to undermine crypto during the Biden years. According to insiders, this went so far as to regulators putting heat on commercial banks to shutter accounts affiliated with digital asset firms, thus making operations extremely difficult.
Yesterday, the Federal Deposit Insurance Corporation (FDIC) released 175 documents related to its supervision of banks that sought to engage in crypto-related activities. This change in tack arrived following the Trump Administration’s takeover of the executive branch.
Acting FDIC Chairman Travis Hill issued the following statement in connection with the release:
“I have been critical in the past of the FDIC’s approach to crypto assets and blockchain. As I said last March, the FDIC’s approach ‘has contributed to a general perception that the agency was closed for business if institutions are interested in anything related to blockchain or distributed ledger technology.
Upon becoming Acting Chairman, I directed staff to conduct a comprehensive review of all supervisory communications with banks that sought to offer crypto-related products or services. While this review remains underway, we are releasing a large batch of documents today, in advance of a court-ordered deadline of Friday. 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.
“Previously, the FDIC released 25 so-called ‘pause’ letters sent to 24 institutions interested in pursuing crypto- or blockchain-related activities. The documents released today include (1) additional correspondence with those 24 institutions and (2) correspondence with additional institutions beyond those 24. The documents that we are releasing today show that requests from these banks were almost universally met with resistance, ranging from repeated requests for further information, to multi-month periods of silence as institutions waited for responses, to directives from supervisors to pause, suspend, or refrain from expanding all crypto- or blockchain-related activity. 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.”
Hill said they are re-evaluating their regulatory approach in regard to crypto – a sector of Fintech that is supported by President Trump.
The FDIC said it is currently considering revoking and replacing Financial Institution Letter (FIL) 16-2022 and providing a pathway for institutions to engage in crypto- and blockchain-related activities. FIL 16-2022 targeted supervised institutions active in crypto. The letter effectively destroyed any intent to support digital asset firms by bullying supervised firms to avoid the crypto industry.
The released documents are available here.