Coinbase Stock Drops as FDIC Criticized for Lack of Transparency in Crypto Debanking Probe

Coinbase, a leading cryptocurrency exchange, has publicly criticized the Federal Deposit Insurance Corporation (FDIC) for its lack of cooperation and transparency in the ongoing investigation into Operation Choke Point 2.0. The exchange has accused the FDIC of failing to disclose crucial details about its handling of Freedom of Information Act (FOIA) practices, which has hindered the unwinding of Operation Choke Point 2.0.

Operation Choke Point 2.0, a controversial initiative, has been linked to the debanking of numerous crypto companies, effectively cutting off their access to liquidity. Coinbase's Chief Legal Officer, Paul Grewal, expressed frustration over the FDIC's resistance to transparency efforts. In a message on the X platform, Grewal highlighted the agency's reluctance to provide information on how it conducted due diligence to ensure no documentation related to the event was destroyed. The FDIC has repeatedly refused to share this information, raising concerns about its transparency in handling FOIA requests.

Grewal also noted that the FDIC has withheld key information related to its FOIA practices, providing only "snippets from a few documents" that appear unrelated to the specific FOIA policies or practices challenged in the amended complaint filed by History Associates. This lack of transparency has led to questions about what the FDIC is hiding and its commitment to open governance.

Meanwhile, other regulatory bodies have taken steps to reverse restrictive policies. The Office of the Comptroller of the Currency (OCC) has rolled back 2020 guidance that limited banks' ability to engage with and provide custody services for cryptocurrencies. This rollback is seen as a significant signal for the industry, potentially paving the way for financial institutions to actively participate in the digital assets space.

The recent White House Crypto Summit further underscored the regulatory changes coming to the crypto industry. The summit highlighted the rollback of Biden-era banking regulations, which critics argue facilitated Operation Choke Point 2.0. These developments indicate a shift in regulatory attitudes towards cryptocurrencies, with some agencies moving towards greater cooperation and transparency, while others, like the FDIC, remain resistant.