Banks, Bitcoin, and Bureaucrats: The Crypto Circus đŸŽȘ

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Coinbase, the crypto exchange that’s apparently tired of being the only kid at the blockchain playground, is now begging U.S. banking regulators to let banks join the fun. They’ve sent letters to the OCC, the Federal Reserve, and the FDIC, which sounds less like a regulatory trifecta and more like the lineup for a particularly dull law firm holiday party. Their plea? “Let banks hold, trade, and partner with crypto companies, pretty please with a Bitcoin on top.”

According to Bloomberg, Coinbase wants the OCC to yank an interpretive letter that’s apparently been acting as the crypto equivalent of a bouncer at an exclusive club. They’re also asking the Fed and FDIC to confirm that state-chartered banks can dabble in crypto without getting slapped with a cease-and-desist. Faryar Shirzad, Coinbase’s chief policy officer, chimed in with the kind of statement that makes you wonder if he practices it in front of a mirror: “It’s important for regulators to make clear that banks can work with third-party providers in providing trading and exchange services to their customers.” Riveting stuff.

Coinbase has enlisted three top law firms to back them up, which is either a sign of their commitment or proof that they’ve got more money than sense. These legal eagles argue that banks already have the right to offer crypto services, but regulators have been about as clear as a foggy day in San Francisco. Meanwhile, Congress is investigating “Operation Choke Point 2.0,” which sounds like a rejected James Bond plot but is actually an alleged effort by regulators to strong-arm banks into cutting ties with crypto firms. Coinbase claims they’ve found internal FDIC documents where the agency told banks to “pause” crypto activities, which is bureaucrat-speak for “don’t touch that with a ten-foot pole.”

This isn’t Coinbase’s first rodeo with regulators. Last year, they sued both the FDIC and the SEC, accusing them of conspiring to block crypto firms from basic banking services. Paul Grewal, Coinbase’s chief legal officer, has been doubling down on these claims, even accusing the FDIC of withholding documents in a Freedom of Information Act lawsuit. It’s like a legal drama, but with more acronyms and fewer attractive people.

With Donald Trump back in the political spotlight, crypto firms are crossing their fingers for a friendlier administration. Coinbase has been cozying up to Trump’s team, presumably hoping he’ll tweet something supportive between rants about windmills. Meanwhile, Coinbase executives, including Grewal, are set to testify before Congress this Thursday. Lawmakers will debate whether banks are being unfairly discouraged from working with crypto firms, which could either be a turning point for the industry or just another episode of “As the Bureaucrat Turns.”

So, will banks finally get to play with crypto? Or will regulators keep treating it like the forbidden fruit of the financial world? Stay tuned. 🍿

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2025-02-04 19:33