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FDIC Releases New Batch of Documents Revealing “Operation Choke Point 2.0” Details
The Federal Deposit Insurance Corporation (FDIC) has released 175 documents from its correspondence under the Biden administration, shedding new light on the alleged “Operation Choke Point 2.0” and the debanking of crypto companies. The documents were made public ahead of the U.S. Senate Banking Committee GOP hearing on the matter.
What’s Inside the New Batch of FDIC Correspondence
The newly released documents reveal that the FDIC pressed more companies to debank crypto clients, and the efforts of banks to resist or ask additional questions were met with silence from the FDIC, which could last for months. In some cases, the FDIC sent directives to suspend or refrain from all crypto- or blockchain-related activity altogether.
The documents illustrate that the FDIC was consistent in demanding that banks restrain from supporting clients involved in crypto transactions, despite efforts by financial institutions to convince the agency of the safety and soundness of such transactions.
An Unexpected Ally
During the February 5 hearing, both Democrats and Republicans agreed that the cases they investigated saw unfair denials of banking on political grounds. Surprisingly, Sen. Elisabeth Warren, often seen as an enemy of cryptocurrencies, stepped in to investigate the unfair debanking and take action.
Warren sent a letter to President Trump, expressing her willingness to work with the president, chairman Tim Scott, and Congress to stop debanking.
What’s Next?
Now that the FDIC and the government have become allies of Coinbase, the anti-crypto operations of the previous FDIC iteration will likely be stopped. The bipartisan animosity towards the debanking initiatives is a strong signal of change.
According to Travis Hill, the FDIC will “reevaluate [their] supervisory approach to crypto-related activities.” This includes replacing the Financial Institution Letter (FIL) 16-2022, which obliges institutions supervised by the FDIC to notify it about any engagement with cryptocurrency activity and provide information for review.
The FDIC will work closely with the President’s Working Group on Digital Asset Markets, adhering to safety and soundness principles. This development marks a significant shift in the relationship between the FDIC and the crypto industry.
Tips for crypto investors:
• Stay informed about regulatory changes and updates in the crypto space.
• Understand the risks and benefits of investing in cryptocurrencies.
• Diversify your portfolio to minimize risk.
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