FOIA Documents Shed Light on Regulatory ConcernsThe Federal Deposit Insurance Corporation (FDIC) appears to have discouraged member banks from leveraging public blockchain networks like Ethereum, according to unredacted documents obtained by Coinbase. These revelations, released Friday, provide a rare glimpse into the federal agency's behind-the-scenes scrutiny of cryptocurrency-related banking services. The documents, secured through the Freedom of Information Act (FOIA), include 23 heavily redacted letters initially obtained last month and two additional letters unveiled in near-full detail following a court order.One of the most revealing letters, dated March 2022, highlights a case where the FDIC took issue with a New York-based bank's plans to launch a “Bank Digital Deposit” program on a public blockchain. Although the specific blockchain remains undisclosed, the regulator's concerns centered on the use of decentralized, permissionless networks like Ethereum and Solana. Unlike private blockchain systems used for central bank digital currencies, public blockchains are transparent and immune to third-party intervention. This level of openness, it seems, conflicts with the FDIC’s preference for controlled, permissioned systems. The letter further required the bank to undergo a detailed review process before moving forward with its blockchain-based services.Additional correspondence unveiled on Friday exposes a broader regulatory pushback against banks engaging in cryptocurrency-related activities. The FDIC directed member banks to halt initiatives involving Bitcoin transactions and suspend all crypto asset-related activities. These instructions align with earlier disclosures suggesting a coordinated effort by federal agencies to limit banking services supporting the crypto sector. Coinbase Chief Legal Officer Paul Grewal pointed to the documents as evidence of what he described as “Operation Chokepoint 2.0,” an alleged Biden administration effort to stifle the crypto industry through banking regulations.“This shows a coordinated effort to stop a wide variety of crypto activity,” Grewal stated on X, formerly Twitter, referencing the released letters. His remarks draw parallels to a similar strategy under the Obama administration, which targeted industries like firearms and payday lending. The FDIC’s actions, as revealed in these documents, underscore the ongoing tension between regulators and the crypto industry, raising questions about the future of blockchain innovation in the U.S. banking system.This article has been refined and enhanced by ChatGPT.