The Federal Deposit Insurance coverage Company (FDIC) is getting ready to revise its pointers for banks partaking in crypto-related actions, Barrons reported on Feb. 5.
The modifications would enable banks to take part in sure crypto-related actions with out requiring prior regulatory approval. Some banks have reportedly engaged with authorities officers to advocate for providing crypto custody providers and exploring tokenized deposits as a possible different to stablecoins.
These tokenized deposits might combine checking accounts with blockchain know-how, signaling a shift towards adapting banking infrastructure to the evolving digital asset panorama.
New paperwork associated to pause letters
On Feb. 5, the FDIC launched 175 paperwork associated to its oversight of banks concerned in or in search of to interact in crypto providers, highlighting a shift within the company’s stance.
The paperwork pertain to the 2022 “pause letters,” which the FDIC despatched to 24 monetary establishments, advising them to halt or keep away from providing crypto-related providers.
In a press release, FDIC appearing chairman Travis Hill mentioned:
“Our determination to launch these paperwork displays a dedication to boost transparency, past what’s required by the Freedom of Data Act (FOIA), whereas additionally making an attempt to meet the spirit of the FOIA request.”
The FOIA request was filed by Coinbase on Oct. 18 and seeks readability on an alleged 15% deposit cap imposed on crypto-friendly banks. The FDIC complied with the request in December 2024, though the paperwork had been closely redacted. A much less censored model was revealed on Jan. 3.
Coinbase chief authorized officer Paul Grewal mentioned that the regulator retained info as a result of two extra letters had been included within the uncensored paperwork.
In a Feb. 5 X put up, he reiterated the allegations, claiming that the FDIC was hiding extra pause letters.
Resistance by FDIC
Hill assessed that the paperwork launched reveal that requests from banks in search of crypto-related providers “had been nearly universally met with resistance,” because the FDIC repeatedly requested additional info and remained silent for months.
He added:
“Each individually and collectively, these and different actions despatched the message to banks that it could be terribly tough — if not unattainable — to maneuver ahead. In consequence, the overwhelming majority of banks merely stopped attempting.”
Grewal highlighted items of the FDIC-shared paperwork he thought confirmed the banks folding below the strain of the regulator’s threats. He mentioned the FDIC typically pressured banks by performing a “regulation by exhaustion.”
This tactic concerned sending an preliminary letter urging the interruption of a crypto-related service and asking for clarification. After the financial institution answered the FDIC requests, the regulator positioned them on maintain, prompting the financial institution to desert its crypto-related providing.
In line with the paperwork, the FDIC listed BTC volatility, reputational threat, and shopper safety threat as the primary causes behind its determination to pause providers.
Caitlin Lengthy, founder and CEO of Custodia Financial institution, identified a number of situations within the launched paperwork, together with FDIC officers’ inner chats, the place the phrase “deposit” was talked about.
In line with Lengthy, deposit is a time period used to handle US dollars-denominated deposits. A chunk of one of many inner chats within the paperwork mentions staying away from crypto deposits, which she assessed because the official saying to keep away from receiving deposits from crypto corporations.