Coinbase Exec Unveils Operation Chokepoint 2.0 AllegationsCoinbase’s chief legal officer Paul Grewal has published previously undisclosed letters from the Federal Deposit Insurance Corporation (FDIC), revealing what he claims to be evidence of a concerted regulatory effort to discourage banks from engaging with the cryptocurrency sector. Dubbed “pause letters,” these communications, obtained via Freedom of Information Act (FOIA) requests, were issued throughout 2022 and urged banks to suspend or avoid crypto-related services. Grewal contends these actions, which he calls "Operation Chokepoint 2.0," are indicative of politically motivated regulatory measures against the crypto industry.Re: the letters that show Operation Chokepoint 2.0 wasn't just some crypto conspiracy theory. @FDICgov is still hiding behind way overbroad redactions. And they still haven't produced more than a fraction of them. But we finally got the pause letters: https://t.co/Me41BXpbdF…— paulgrewal.eth (@iampaulgrewal) December 6, 2024 The letters, dated as early as March 2022, raised alarms within the crypto community for their extensive redactions and pointed language discouraging banks from pursuing crypto activities. The FDIC cited its lack of clarity on regulatory requirements, stating that no determinations had been made regarding the filings necessary for such operations. This ambiguity was coupled with demands for detailed information about banks’ crypto offerings to ensure their compliance with safety and soundness standards. Legal analyses of these services were also scrutinized under Part 362 of FDIC Rules and Regulations, which govern insured state banks. The heavily redacted nature of the documents has fueled further criticism, with some industry experts questioning the transparency of the FDIC’s oversight.Source: FDICCritics argue that the letters represent a deliberate attempt to stifle innovation in the crypto space. Caitlin Long, CEO of Custodia Bank, characterized the communications not as temporary pauses but as indefinite directives aimed at shutting down lawful crypto operations. She described the language as “cease and desist letters cloaked in legalese,” designed to block the industry's development under the guise of regulatory prudence. Long also pointed to the Federal Reserve’s involvement, as it was copied on many of the letters, suggesting a broader, coordinated effort among U.S. regulators.Grewal’s disclosure adds weight to claims that the FDIC and other agencies have targeted the crypto sector through unofficial policies. He emphasized that the letters were not a conspiracy theory but concrete evidence of deliberate action, citing a broader trend of regulatory hostility. The FOIA request, filed by Coinbase in October, also sought clarification on an alleged 15% deposit cap imposed on banks serving crypto clients, further underscoring concerns of systemic discrimination.The implications of these findings are profound, as they highlight the challenges faced by crypto firms attempting to integrate with the traditional financial system. Critics warn that such measures risk driving innovation offshore, leaving the U.S. at a competitive disadvantage in the rapidly evolving blockchain and digital currency space. As the debate intensifies, Grewal has called on the incoming U.S. administration to reverse these policies, advocating for a more balanced approach to crypto regulation.This article has been refined and enhanced by ChatGPT.