Coinbase renewed calls on federal banking regulators Tuesday to “remove unlawful and unjustified impediments” that limit banks’ abilities to offer cryptocurrency custody and execution services.
In a letter to the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corp., Coinbase Chief Policy Officer Faryar Shirzad wrote that banks should “not be artificially restrained from using new technologies” including offering services through partnerships with crypto firms like Coinbase.
He requested that the regulators confirm that banks are permitted to offer crypto custody and execution services either directly or through third parties, and that they remove roadblocks to crypto companies looking to partner with banks.
“We believe that clear, durable rules, established through proper democratic channels, will benefit all stakeholders – from traditional banks to crypto companies, and most importantly, the consumers we serve,” Shirzad wrote in an accompanying blog post.
Spokespeople for the Fed, the FDIC and the OCC declined to comment.
But on Wednesday, the FDIC released 175 documents linked to its supervision of banks that engaged in, or wanted to engage in, crypto-related activities.
The documents relate to the 25 previously released “pause” letters the FDIC sent to institutions interested in pursuing crypto activities, and emerge from the FDIC’s legal battle with Coinbase.
Acting Chair Travis Hill said the documents “show that requests from these banks were almost universally met with resistance, ranging from repeated requests for further information, to multi-month periods of silence as institutions waited for responses, to directives from supervisors to pause, suspend, or refrain from expanding all crypto- or blockchain-related activity.”
“[T]hese and other actions sent the message to banks that it would be extraordinarily difficult — if not impossible — to move forward,” he said. “As a result, the vast majority of banks simply stopped trying.”
Hill, who has long been critical of the FDIC’s past approach on crypto, has ordered a comprehensive review of such communications.
“Looking forward, we are actively reevaluating our supervisory approach to crypto-related activities,” Hill said, including by “providing a pathway for institutions to engage in crypto- and blockchain-related activities while still adhering to safety and soundness principles.”
The FDIC is also working on replacing its Financial Institution Letter, which warned that crypto-related activities “may pose significant safety and soundness risks as well as financial stability concerns,” and will be engaging with the President’s Working Group on Digital Asset Markets established by an executive order Jan. 23.
The Trump administration and its regulatory personnel are widely seen as more amenable to the digital asset industry than its predecessor, which was accused of a coordinated government effort to thwart its progress.
Coinbase was one of several crypto firms that donated $1 million to President Donald Trump’s inauguration campaign, according to Senate Office of Public Records reports seen by Bloomberg.
Trump, once a crypto skeptic, has been a vocal proponent of digital assets in the last year, speaking at the Bitcoin 2024 conference in Nashville, Tennessee, and even launching his own memecoin days before he started his second presidential term.
