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Crypto Controversy: Coinbase Challenges FDIC Over Disclosure of Key Records

In a bold move, Coinbase has taken legal action against the Federal Deposit Insurance Corporation (FDIC) to uncover details about alleged “pause letters” that discourage banks from engaging with crypto services.

The exchange filed court papers demanding the FDIC disclose how it managed these records, as well as all FOIA denial letters from 2020 to 2024.

Reports indicate that the FDIC has used a broad exemption to classify these letters as “confidential bank examination records,” effectively stifling transparency.

Despite multiple court orders, the FDIC has been slow to release critical documents, leading Coinbase to assert that the agency is intentionally obstructing efforts to clarify its treatment of cryptocurrencies.

Coinbase’s Chief Legal Officer, Paul Grewal, expressed frustration on social media, stating that the FDIC's tactics are unacceptable and will not be tolerated.

The FDIC's policy reportedly instructs examiners to withhold any documents pertaining to Exemption 8, without differentiating between facts and analysis.

This lack of transparency raises concerns, particularly as a recent hearing revealed that the FDIC lacks a formal litigation-hold process for FOIA requests.

With 75% of crypto funds struggling to access banking services due to perceived regulatory risks, the implications of these “pause letters” are significant for firms reliant on banking partnerships.

Court intervention could clarify who authorized these controversial letters and the rationale behind the FDIC's heavy-handed approach.

Overall, Coinbase's fight for transparency may have wider repercussions for the future of crypto and its relationship with the banking sector.