Key Highlights:
• FDIC releases 175 documents revealing the agency’s resistance toward banks engaging in crypto-related activities.
• Regulators repeatedly stalled, demanded excessive information, or outright blocked banks from entering the crypto space.
Paradisers! Ever wondered why traditional banks have been dragging their feet on crypto? Well, the FDIC just dropped a bombshell, releasing 175 documents detailing exactly how regulators have been treating banks that dared to touch blockchain and digital assets. And let’s just say, it wasn’t exactly a warm welcome.
Acting Chairman Travis Hill, in a statement accompanying the document release, admitted what many had already suspected: the FDIC had essentially put up a “No Crypto Allowed” sign for banks. While banks submitted proposals and inquiries about entering the digital asset market, regulators often responded with radio silence, repeated requests for excessive documentation, or direct instructions to hit the brakes on anything blockchain-related.
A Pattern of Resistance
According to the documents, the FDIC had previously sent 25 cease-and-desist letters to 24 banks interested in crypto-related services. The newly released documents show that banks kept trying to navigate regulatory hurdles, only to be met with roadblocks.
The tactics used by regulators included:
Deliberate delays—Banks faced months-long waits for responses to their crypto-related proposals, endless demands for information—Regulators repeatedly asked for additional documentation, often stalling progress indefinitely, and Outright prohibitions—Some banks were directly told to pause, suspend, or abandon their crypto operations altogether.
The result? Most banks simply gave up. The message from regulators was clear: engaging in crypto wasn’t worth the regulatory headache.
FDIC’s Next Move: A Policy U-Turn?
Now, in what seems like an effort to clean up the mess, Hill has announced that the FDIC will replace its controversial 2022 guidance (FIL 16-2022) and create a new compliance pathway for banks that want to engage in crypto and blockchain activities.
Even more notably, the FDIC will work with the White House’s new Digital Asset Working Group to align with President Biden’s January 23 executive order on crypto regulation.
This shift suggests that the FDIC is no longer looking to shut down crypto banking entirely, but rather, reshape the rules to ensure “safety and soundness” while allowing controlled engagement.
The Big Picture: A New Era for Crypto Banking?
For years, the crypto industry has accused U.S. regulators of engaging in “Operation Choke Point 2.0”—a coordinated effort to systematically push banks away from crypto. This document release all but confirms those suspicions.
However, the FDIC’s promise to rethink its approach could signal a shift in how regulators treat crypto banking going forward. If banks finally get a clear compliance framework, this could pave the way for increased institutional involvement in crypto, which would be a game-changer for the industry.
For now, banks, crypto firms, and investors will be watching closely to see if this policy change actually removes the regulatory chokehold—or just tightens it in a different way.
