Choke Point 2.0 Proof? Coinbase Obtains Additional FDIC Letters That Discouraged Banks To Use Bitcoin

Letters obtained and revealed to the public by cryptocurrency exchange giant Coinbase revealed that the Federal Deposit Insurance Corporation (FDIC) discouraged member banks to engage in public blockchains, and for Coinbase, this is proof that Operation Choke Point 2.0 (OCP 2.0) during the Biden administration existed.

Coinbase Chief Legal Officer Paul Grewal took to X over the weekend to reveal that the company obtained two more "unredacted OCP 2.0 letters from the FDIC."

"They show a coordinated effort to stop a wide variety of crypto activity – everything from basic BTC (Bitcoin) transactions to more complex offerings," he said in a series of posts.

What the Letters Reveal

Coinbase already obtained heavily redacted versions of 23 letters through the Freedom of Information Act (FOIA) last month, but on Friday, the crypto exchange obtained two new ones that have been almost entirely unredacted, showing the extent of the FDIC's supposed efforts to keep banks from utilizing blockchain technology.

• BTC activity – One letter dated March 11, 2022 showed that the FDIC told members of the board it has yet to determine whether regulatory filings are necessary for banks to engage in activity around Bitcoin transactions. Thus, it "respectfully" asked members to "pause all crypto asset-related activity."
• Bitcoin service – In a letter dated Apr. 5, 2022, the FDIC told board members about a Bitcoin service from a certain bank that was already catering to around 2,800 customers. It said a review will take place first but until it is completed, the bank "should not expand the service to additional customers."
• Other digital assets – A letter dated June 22, 2022 showed that the FDIC told board members a bank submitted an application "to engage in digital asset activities," but the FDIC said it still has questions regarding the activities.

There were other letters that had similar requests and concerns from the FDIC sent between 2022 and early 2023. It is unclear whether there were other letters sent last year to member banks.

Some of the letters had more specific aspects of crypto and Bitcoin that banks were apparently exploring but the FDIC wanted more reviews or asked for a pause in, including Bitcoin-linked payment cards and other BTC activity in banking mobile apps.

Grewal Calls for Congress Hearings

Following the revelation that the FDIC "magically found two more pause letters" in relation to the court order for the release of the documents, Grewal said Congress should initiate a hearing as soon as possible to determine whether the FDIC was acting "in good faith."

Coinbase and a growing number of crypto executives have said the government under outgoing President Joe Biden worked with financial regulators to "de-bank" crypto companies and leaders in a coordinated effort allegedly dubbed Operation Choke Point 2.0.

'Crypto Twitter' Reacts to Big Reveal

Crypto users on X, often referred to as "Crypto Twitter," reacted wildly to the release of the two new unredacted documents, mostly fuming over how the FDIC supposedly tried to "block" traditional financial institutions from adopting Bitcoin and other blockchain-based assets.

Chris O, a well-known figure in the space, especially in the Cardano community, the revelation should be a catalyst for a class-action lawsuit against the Biden government.

Digital currency policy advisor Tanvi Ratna said the FDIC's "reluctance" to provide full transparency without a court order raises serious concerns about "regulatory accountability," something the U.S. Securities and Exchange Commission (SEC) under outgoing Chair Gary Gensler has also been criticized for.

One user blasted the FDIC for the "incredible level of gaslighting" employed in its supposed bid to stop banks from serving crypto users.

Prominent crypto enthusiast Nic Carter said that the letters show how OCP 2.0 is "not a conspiracy theory," but actually happened in real life.

Former Massachusetts senatorial candidate John Deaton said that if the FDIC's actions "go unchallenged," it will establish a dangerous precedent for regulatory agencies and bodies to "quietly suppress entire industries they disfavor, stifling innovation, competition, and economic opportunity."

It remains to be seen how the case will push through and whether Coinbase's legal fight in relation to OCP 2.0 will reveal more details not just about the alleged operation but also about the growing desire of traditional financial providers to adopt crypto.