**The FDIC’s Crypto Crackdown: A “Pause” or a Full Stop?**

Coinbase’s chief legal officer, Paul Grewal, has pulled back the curtain on a series of letters from the Federal Deposit Insurance Corporation (FDIC) to banks, revealing a concerted effort throughout 2022 to cool their enthusiasm for cryptocurrency. These so-called “pause letters,” dating back to March 2022, urged banks to hit the brakes on crypto-related activities, citing regulatory uncertainties and safety concerns.

The FDIC’s hesitation stemmed from a lack of clear guidelines for banks venturing into the crypto sphere. One letter candidly admitted, “We haven’t figured out the rules for this yet!” Heavy redactions throughout the documents suggest that sensitive information about specific crypto services or products was being discussed. Essentially, the FDIC wanted more information before giving banks the green light to play in the crypto sandbox.

Grewal, armed with a Freedom of Information Act request, obtained these letters and is crying foul. He claims they’re evidence of “Operation Choke Point 2.0,” a supposed government campaign to stifle the crypto industry. This isn’t just a conspiracy theory, Grewal insists, pointing to the heavy redactions and the limited number of documents released as proof of a cover-up. He’s calling on the incoming administration to overturn what he sees as politically driven decisions against crypto.

Adding fuel to the fire, Caitlin Long, CEO of Custodia Bank, argues that these weren’t “pause” letters at all, but thinly veiled “cease and desist” orders designed to shut down legitimate crypto businesses. The fact that the Federal Reserve was copied on many of these letters suggests a coordinated effort to discourage banks from dipping their toes into the crypto waters.

These letters, spanning almost three years, paint a picture of regulators working together to limit banks’ involvement in the crypto world. Critics argue that this approach stifles innovation and hinders the industry’s ability to grow within the US financial system. Is this a prudent approach to protect the financial system, or a calculated move to hold back the burgeoning crypto industry? The debate continues.

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