FDIC Documents Reveal Pressure on Banks to Cut Off Crypto Firms

Bipartisan Pushback Against Crypto Debanking After FDIC Document Dump

The Federal Deposit Insurance Corporation (FDIC) released 175 new documents revealing how the agency pressured banks to cut off services to cryptocurrency businesses. head of a GOP hearing before the U.S. Senate Banking Committee, the records reveal that the FDIC issued orders during the Biden administration that discouraged financial institutions from doing business with cryptocurrency customers.

The practice, known as “Operation Choke Point 2.0,” effectively denied banking access to crypto firms without clear justification, citing reputation risks and regulatory concerns.

Bipartisan Opposition to Debanking Practices

During the Feb. 5 hearing, both Republican and Democratic lawmakers acknowledged the unfairness of politically motivated debanking. Surprisingly, Senator Elizabeth Warren, known for her anti-crypto stance, joined the discussion, calling for action against unjust denials of banking services. In a letter to a former president, Warren highlighted thousands of debanking cases over three years, though she did not explicitly mention cryptocurrency. This bipartisan scrutiny signals growing resistance to regulatory overreach in the banking sector and raises questions about consistent crypto regulation.

A FDIC Shift in Favor of Crypto

Following Trump's inauguration, the FDIC's leadership adopted a more pro-crypto position. Travis Hill, the newly appointed FDIC Chair, pledged to review the agency's regulatory strategy, which included amending Financial Institution Letter (FIL) 16-2022, which previously mandated that banks submit reports on crypto-related activity for examination. Trump's administration made regulations on stablecoin.

Together with its proposal for a more balanced regulatory framework that encourages financial innovation while upholding oversight, the FDIC also promised to work with the President's Working Group on Digital Asset Markets.

Future Outlook for Crypto Banking

With the FDIC’s leadership shift and growing bipartisan scrutiny of debanking practices, the regulatory landscape for crypto firms is poised for change. The agency’s commitment to revising restrictive policies and working closely with the President’s Working Group on Digital Asset Markets signals a move toward a more inclusive financial system. 

While regulatory oversight will remain, the renewed approach may foster a more stable and transparent environment for crypto businesses, ensuring fair access to banking services without undue restrictions.