The interim chief of the Federal Deposit Insurance Corp (FDIC) said his agency is overhauling its digital assets supervision, and the banking regulator has unveiled correspondence in which FDIC officials steered banks away from performing cryptocurrency business.
At roughly the same time, US senators started preparing to gather for a hearing about what has been referred to as the US debanking of crypto clients.
In 2024, Coinbase sued the FDIC, which allowed the company to use FOIA to force the agency to release some of its correspondence with financial firms, leading to these crypto-related hearings.
Sharing FDIC communications
Travis Hill, acting FDIC chairman, has unveiled the agency’s past documents and said the FDIC will be reconsidering its previous crypto guidance that deliberately kept banks an arm’s length away from what had been characterized as the unregulated volatility of crypto.
This correspondence between the FDIC and banks has been the focus of a court Freedom of Information Act (FOIA) battle between cryptocurrency exchange platform Coinbase and the bank regulator in which the courts had directed the FDIC to produce those documents by Friday, February 7.
Acting Chairman Travis Hill issued the following statement in connection with the release of those 175 documents: “I have been critical in the past of the FDIC’s approach to crypto assets and blockchain. As I said last March, the FDIC’s approach ‘has contributed to a general perception that the agency was closed for business if institutions are interested in anything related to blockchain or distributed ledger technology’.”
The agency, under its previous chair, Martin Gruenberg, had expressed concerns about the volatility of these crypto assets, calling them threats to financial stability.
“Requests from these banks were almost universally met with resistance, ranging from repeated requests for further information, to multi-month periods of silence as institutions waited for responses, to directives from supervisors to pause, suspend, or refrain from expanding all crypto- or blockchain-related activity,” Hill said.
Hill also indicated the FDIC is replacing an April 2022 Financial Institution Letter (FIL) 16-2022 to provide a “pathway for institutions to engage in crypto- and blockchain-related activities while still adhering to safety and soundness principles.” The letter had directed all FDIC-supervised institutions that intended to engage in or were currently engaged in activities involving or related to crypto assets to notify the FDIC and provide certain types of information to the agency.
Senate hearings on debanking
Relatedly, the US Senate Committee on Banking, Housing and Urban Affairs just convened a hearing entitled, “Investigating the Real Impacts of Debanking in America.”
The witnesses were Nathan McCauley, Co-Founder and CEO, Anchorage Digital; Stephen Gannon, Partner, Davis Wright Tremaine LLP; Mike Ring, President, CEO and Co-Founder of Old Glory Bank; and Aaron Klein, Senior Fellow in Economic Studies, Brookings Institution.
The subcommittee also said the FDIC used offline conversations and threats of formal supervisory actions to pressure banks to deny service to digital asset firms, their employees, and even their customers.
During the hearing, FDIC Chair Hill produced a 790-page document featuring letters written by executives in the US banking sector that had urged the FDIC during the Biden administration to ease restrictions on them experimenting with crypto-related activities and services. And Nathan McCauley, the co-founder and CEO of federally chartered crypto bank Anchorage Digital, shared his account of Anchorage being severed from banking relationships because of regulatory pressure.
“To say this is pervasive is an understatement,” McCauley told the senators in his testimony. He called it so common that “it became background noise” in which it was “just assumed that if you were a crypto company, you would have trouble getting bank services.”
The FDIC used offline conversations and threats of formal supervisory actions to pressure banks to deny service to digital asset firms, their employees, and even their customers, McCauley said.
The ranking Democrat on the committee at the hearing, Senator Elizabeth Warren, agreed that debanking was happening – but she said in a letter directed to President Trump that the phenomenon was happening to Muslims, certain charities, Armenian Americans, legal cannabis businesses and others for possibly illegal reasons. She further stressed that the freeze US Treasury Secretary Bessent has put on the Consumer Financial Protection Bureau will “mean more Americans across the country will be unfairly de-banked and lose the one agency that is working to help them.”
The US House Financial Services Committee similarly held an Oversight and Investigations Subcommittee hearing, led by Subcommittee Chairman Dan Meuse (R-PA), entitled “Operation Choke Point 2.0: The Biden Administration’s effort to put Crypto in the Crosshairs.”
The subcommittee determined that the Biden Administration’s Operation Choke Point 2.0 was carried out by the prudential regulators specifically to target and debank the digital asset ecosystem.
The subcommittee also said the FDIC used offline conversations and threats of formal supervisory actions to pressure banks to deny service to digital asset firms, their employees, and even their customers.
Discussion draft for stablecoins
Late on Thursday, the US House Financial Services Committee Chairman French Hill (R-AZ) and Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee Chairman Bryan Steil (R-WI) released a discussion draft of a bill to establish a framework for the issuance and operation of dollar-denominated payment stablecoins in the US.
“Building upon our work on digital assets in the last Congress, our discussion draft will provide clarity for payment stablecoins and ensure a federal and state path for stablecoin issuers. Subcommittee Chairman Steil and I look forward to receiving feedback from the public and working in tandem with the Trump Administration and our colleagues in the House and Senate to make sure we get this right and deliver a dollar-backed stablecoin for the American people,” Chairman Hill said.
The bill is called ‘‘The Stablecoin Transparency and Accountability for a Better Ledger Economy Act of 2025’’ or the ‘‘STABLE Act.” It creates a regulatory framework and multiple regulatory paths for payment stablecoin issuers in the United States and it would grant the Office of the Comptroller of the Currency the authority to approve and supervise federally qualified nonbank payment stablecoin issuers.
