In a shocking revelation, internal communications from the Federal Deposit Insurance Corporation (FDIC) have surfaced, indicating that the U.S. government instructed banks to suppress their involvement with crypto businesses in 2022. These documents, brought to light by Coinbase, shed light on the regulatory ambiguity that has created tension between crypto firms and federal banking authorities.

The FDIC directives, as revealed by Coinbase, instructed banks to pause all activities related to cryptocurrencies. This move reportedly delayed or halted banks’ plans to offer crypto services until they could address unclear compliance requirements. The lack of clear guidelines in the crypto space has long been a point of contention, with banks citing concerns about regulatory compliance, fraud risks, and reputational harm as reasons for hesitancy in engaging with crypto firms.

Coinbase has labeled this coordinated effort to restrict banking access for legitimate crypto businesses as “Operation Chokepoint 2.0.” This practice, according to industry insiders, effectively isolates the crypto industry from mainstream financial services by imposing informal restrictions in the absence of formal guidelines.

For years, crypto companies have struggled to establish reliable banking partnerships in the U.S. due to vague or overly cautious guidance from regulators. The FDIC’s communications requiring banks to answer complex questions about their proposed crypto activities have further complicated the situation, often leading to delays in approvals or abandonment of plans.

Critics argue that such regulatory efforts to limit the crypto industry’s access to banking services stifle legal businesses and hinder their ability to operate within traditional financial infrastructure. Coinbase’s Chief Legal Officer, Paul Grewal, has called for the incoming administration to reverse what he deems as politically motivated regulatory decisions like Operation Chokepoint 2.0.

The ongoing struggle between the crypto industry and banking institutions underscores the need for clear and consistent regulatory frameworks to foster innovation and growth in the digital asset space. As the debate continues, the implications of these suppressed crypto activities on the broader financial landscape remain to be seen.