FDIC Admits to Sending ‘Pause Letters’ to Banks: What’s Behind the Move to Restrict Crypto Services?

FDIC’s Efforts to Limit Crypto Activity Under Scrutiny

On January 6, 2025, Coinbase Chief Legal Officer Paul Grewal shed light on the ongoing legal battle between Coinbase and the Federal Deposit Insurance Corporation (FDIC) over alleged attempts to restrict crypto services. According to Grewal, the FDIC abused FOIA exemption 8 to conceal information from court-compelled documents, including ‘pause letters’ sent to banks urging them to halt services to crypto clients.

What are ‘Pause Letters’?

‘Pause letters’ are documents sent by the FDIC to financial institutions, instructing them to stop providing services to clients associated with cryptocurrency activity. These letters, which were initially heavily redacted, have now been partially disclosed, revealing information that the FDIC claimed would cause ‘reasonably foreseeable harm’ to the recipients.

FDIC’s Use of FOIA Exemption 8 Raises Concerns

The FDIC used FOIA exemption 8 to heavily redact the disclosed documents, citing the need to protect confidential supervisory information. However, the newly revealed data suggests that the FDIC’s excuse was unfounded and aimed at covering up evidence of Operation Choke Point 2.0, a series of efforts to block services for law-abiding customer groups, including those associated with cryptocurrencies.

Operation Choke Point 2.0: A Real Threat to Crypto Services

There are several accounts of cases where banks stopped providing services to clients associated with cryptocurrency, and the FDIC’s ‘pause letters’ have created uncertainty for U.S. entrepreneurs in the crypto sector. While the FDIC’s letters do not necessarily urge banks to completely close clients’ accounts, they have led to indefinite account blocks, causing problems for crypto businesses.

Coinbase’s Lawsuit and the Fight for Transparency

Coinbase initially sued the FDIC to enforce the Freedom of Information Act, but the request was denied. The company has continued to push for transparency, and the recent disclosure of ‘pause letters’ has shed light on the FDIC’s alleged anti-crypto efforts.

Support from Senator John E. Deaton

Senator and former prosecutor John E. Deaton has expressed support for the efforts to stop Operation Choke Point 2.0 and has offered to lead a federal investigation into the matter without salary.

As a former prosecutor and Special Assistant United States Attorney, I am very serious about volunteering to help lead a federal investigation into ChokePoint 2.0. The American people deserve the truth a hell of a lot more than I or anyone else.

Key Takeaways:

  • FDIC’s ‘pause letters’ instructed banks to halt services to crypto clients.
  • FDIC used FOIA exemption 8 to heavily redact disclosed documents.
  • Newly revealed data suggests the FDIC’s excuse was unfounded and aimed at covering up Operation Choke Point 2.0.
  • Operation Choke Point 2.0 is a real threat to crypto services, with several accounts of banks stopping services to crypto clients.

Stay up-to-date with the latest news on Global Crypto News and follow us for more updates on the ongoing battle between Coinbase and the FDIC.

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