“What we’ve seen so far speaks volumes,” Coinbase’s legal head on partial FDIC letters.
Key Takeaways
- Coinbase found over 20 FDIC letters restricting banks from offering crypto services.
- FDIC’s concerns include consumer protection and financial stability with crypto risks.
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Coinbase recently discovered over 20 documented cases where the Federal Deposit Insurance Corporation (FDIC) advised banks to pause or avoid crypto-related activities.
The Vaughn Index, filed by the FDIC, outlines letters where FDIC representatives cautioned banks about the potential risks associated with crypto assets, focusing on consumer protection, financial stability, and operational safety.
The documents include correspondence between the FDIC and various banks, revealing that as far back as March 2022, the FDIC was urging financial institutions to halt crypto projects, citing unresolved supervisory concerns.
In one instance, on March 11, 2022, FDIC Assistant Regional Director Eric T. Guyot urged a bank to “pause all crypto asset-related activity” as the agency assessed potential safety and soundness risks associated with the bank’s proposed crypto product.
Similarly, on March 25, 2022, FDIC Acting Regional Director Jessica A. Kaemingk advised a bank’s board to reconsider a crypto-asset program, citing “safety and soundness” concerns and requesting further documentation to ensure compliance.
Then, on April 22, 2022, the FDIC requested a bank pause expanding an existing crypto service, seeking further clarification on compliance and risk management before approving broader access.
Coinbase’s Chief Legal Officer, Paul Grewal, shared his perspective, noting that the FDIC’s stance on crypto could hinder the broader industry’s ability to access essential banking services.
“While we don’t have the full letters yet, what we’ve seen so far speaks volumes,” Grewal said, advocating for a more transparent regulatory framework.
Grewal emphasized Coinbase’s commitment to regulatory transparency and announced that the company would continue to file Freedom of Information Act (FOIA) requests to further uncover the regulatory direction on crypto.
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