FDIC document dump reveals ‘Chokepoint 2.0’ pressure on crypto banking

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The Federal Deposit Insurance Corporation (FDIC) released documents revealing extensive pressure on banks to limit their involvement with crypto-related activities, according to newly published records.

The documents show the FDIC actively intervened in banks’ relationships with crypto companies, including directing banks to restrict US dollar deposit accounts for crypto firms.

The FDIC issued at least 24 “pause letters” to banks, instructing them to halt or reduce crypto-related services. These letters often cited safety and soundness concerns, stalling many institutions’ crypto initiatives.

Caitlin Long, CEO of CustodiaBank, highlighted multiple instances of FDIC pressure.

“The FDIC did pressure some banks not to take US DOLLAR deposits from crypto companies”

The records indicate the FDIC issued at least 24 pause letters to banks, instructing them to halt or reduce crypto-related services.

In one case, the agency forced a bank to reimburse customers for Bitcoin price losses, even though the bank’s program wasn’t designed to take on the price risk of cryptoassets.

This action underscores the FDIC’s willingness to enforce measures critics consider regulatory overreach.

The document release coincides with Scott Bessent’s appointment to the FDIC board, though his role in the disclosure remains unclear.

The release follows recommendations from the FDIC Office of Inspector General’s report on managing crypto risks and appears part of a broader strategy to limit crypto’s presence in traditional finance.

Trump promised to dismantle Operation Choke Point 2.0, which allegedly targets the crypto industry by limiting its banking access.

Yesterday, Coinbase requested US banking regulators to permit banks to offer crypto custody and trading services, amidst an investigation into regulatory barriers.