Paul Grewal, Coinbase’s chief legal officer, criticized the Federal Deposit Insurance Corporation’s (FDIC) approach to Freedom of Information Act (FOIA) requests. Grewal stated that the FDIC has implemented restrictive practices in its responses.
Deficiencies in FOIA Requests
Grewal claimed that the FDIC did not perform full-text searches of its Regional Automated Document Distribution (RADD) database. It also said it limited the range of data disclosed by denying requests for documents stored in collaboration tools such as Microsoft Teams.
Coinbase argued that the FDIC marked certain documents as disputed or attorney-client privileged, thus preventing sharing. Stating that at least 150 documents were not included in the FOIA responses, Grewal cited this situation as a source of concern in the institution’s accountability.
Concerns About the Use of “Pause Letter”
Grewal claimed that the “pause letters” the FDIC sent to banks asking them to stop services to cryptocurrency customers were excessively redacted. He stated that these documents were protected under FOIA Exemption 8 and were used to conceal information even though they were not confidential.
Stating that these letters focused on issues such as crypto borrowing, stablecoins and blockchain-based payment systems, Grewal said that banks did not receive explanations about the restrictions and that this posed a legal risk for compliant crypto businesses.
Operation Choke Point 2.0 Claims Resurrected
This has led to the resurgence of the term ‘Operation Choke Point 2.0′, which is used to describe regulators’ efforts to deny banking services to crypto companies. Critics have alleged that the FDIC and other regulators are secretly forcing banks to avoid crypto transactions.
Grewal advocated for equal treatment of all industries, emphasizing that the FDIC should provide publicly available information. He noted that this approach slows down innovation in financial services.
“Considering the increased scope of requests, we will need time to evaluate your communication and provide our response.”
This is how FDIC representatives responded.
These developments have brought the crypto industry’s relationships with regulatory authorities and their need for transparency back to the agenda.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
