FDIC Unveils 175 Documents: US Banks Discouraged from Crypto Engagement

The Federal Deposit Insurance Corporation (FDIC) has unsealed 175 documents, revealing how US banks were discouraged from engaging with cryptocurrency firms. The agency's past approach, under the Biden administration, was criticized for being overly restrictive and contributing to a perception that it was closed to institutions interested in blockchain or distributed ledger technology.

Acting FDIC Chairman Travis Hill acknowledged the agency's past resistance to banks' involvement in crypto-related activities. He stated that requests from banks were met with resistance, ranging from repeated information requests to directives to pause or refrain from expanding crypto or blockchain-related activity. This approach effectively discouraged banks from pursuing crypto-related services.

The FDIC's actions were seen as part of the "Choke Point" policy, aimed at curtailing the expansion of the cryptocurrency industry by restricting crypto companies' access to banking services. However, the agency is now reevaluating its regulatory approach to cryptocurrency-related activities. It has removed the original regulatory warning and is replacing it with a new framework that allows banks to engage in crypto and blockchain-related activities while adhering to safety and soundness principles.

In a significant shift, the FDIC is planning to revise its cryptocurrency guidance to allow banks to engage in certain cryptocurrency activities, such as custody and tokenized deposits. Bank officials have met to discuss these changes, signaling a more open approach to cryptocurrency within the banking sector.