FDIC ordered to cease ‘blanket redacting’ in Coinbase FOIA case

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As a seasoned crypto investor with over two decades of experience navigating the ever-evolving financial landscape, I have witnessed my fair share of regulatory turbulence. The recent developments between Coinbase and the Federal Deposit Insurance Corporation (FDIC) have piqued my interest and sparked a glimmer of hope in this industry’s long-awaited quest for clarity and fairness.

According to the latest updates, the Federal Deposit Insurance Corporation (FDIC) has been directed to follow a court ruling and perform more careful editing before releasing certain letters that were requested by the cryptocurrency exchange, Coinbase. This step is intended to halt the release of these letters temporarily.

On December 12th, Judge Ana C. Reyes pointed out extensive blackouts in the response provided by the Federal Deposit Insurance Commission in response to Coinbase’s requests under the Freedom of Information Act.

As a researcher, I noted Judge Reyes’ assertion that the Federal Deposit Insurance Corporation (FDIC) failed to act in good faith and fell short in complying with court orders, as pointed out by Coinbase Chief Legal Officer Paul Grewal on X. Moreover, Grewal implied that the FDIC might be withholding pertinent information from the industry.

Starting in November 2021, financial institutions started receiving directives from the current government to sever ties with any cryptocurrency-related services. They also took action to exclude specific clients and businesses involved in crypto transactions.

— Chad Steingraber (@ChadSteingraber) November 1, 2024

Coinbase, along with many other players in the cryptocurrency sector, has expressed concern over a widespread practice known as “debanking,” which appears to be enforced by U.S. federal agencies. It is claimed that certain entities involved in an operation called “Operation Choke Point 2.0,” such as the FDIC, have pressured financial institutions into refusing to provide banking services to cryptocurrency businesses.

A group of crypto leaders, such as those from companies like Custodia and Andreessen Horowitz, have argued that regulatory bodies are engaging in a “unified, strategic effort” aimed at disenfranchising technological pioneers and developers in the cryptocurrency sector.

Last week, documents surrendered by the FDIC showed that the U.S. government ordered banks to suppress crypto, vindicating several industry incumbents who insisted on OCP 2.0 for years.

Starting from November 2021, banks started getting directives from the present government to cease all cryptocurrency-related activities. This action extended to financially excluding specific clients and businesses associated with cryptocurrencies (commonly referred to as “debanking”).

— Chad Steingraber (@ChadSteingraber) November 1, 2024

As a crypto investor, I’ve found myself struggling with the murky regulations surrounding digital assets, which only adds to the challenges faced by businesses in this sector. The lack of a uniform regulatory framework has led to complaints about excessive information restrictions and overbearing bureaucracy from institutions, including the FDIC.

Coinbase and other parties filed lawsuits to investigate these suspicions. The movement gained fresh momentum following Donald Trump’s election victory, as the sector looked forward to more equitable treatment and stricter guidelines.

Changes within federal agencies began following Donald Trump’s election win. The Chair of the Federal Deposit Insurance Corporation (FDIC), Martin Gruenberg, along with Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), both stepped down from their positions.

It has been proposed that Paul Atkin, a supporter of cryptocurrency and previous regulatory official, could take over Gensler’s position at the Securities and Exchange Commission (SEC), pending Senate approval. Additionally, Trump had considered nominating Brian Quintenz, head of crypto policy at a16z and a former federal regulator, to head the Commodity Futures Trading Commission (CFTC).

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2024-12-13 00:04