Watchdog group defends US regulators’ approach to crypto firms

A Wall Street watchdog group is pushing back against the narrative in a US House Financial Services Committee (HSFC) hearing into claims crypto was “in the crosshairs” of certain financial regulators.

In a written statement released ahead of a Feb. 6 hearing of the HSFC’s Oversight and Investigations Subcommittee, Better Markets banking policy director Shayna Olesiuk seemed to criticize the narrative from some lawmakers and crypto industry leaders over US government entities allegedly attempting to debank crypto firms, colloquially called “Operation Choke Point 2.0.”

Olesiuk said the Federal Deposit Insurance Corporation (FDIC) was responding to fintech companies “making false and misleading statements” about deposit insurance coverage.

The hearing appeared to be based on some crypto industry executives claiming to have been cut off from traditional banking services based on their ties to digital assets, with the FDIC issuing letters to banks in 2022 suggesting “paus[ing] all crypto asset-related activity.” According to Olesiuk, 22 of the letters the FDIC sent to crypto firms starting in 2022 were not binding but rather warnings about potential enforcement action. 

“The current banking rules put limits on the amount of information on the reasons for a bank account closure that can be shared publicly,” said Olesiuk. “If banks were required to specify the reason for an account closure, however, there would be less chance of misunderstanding or jumping to conclusions about malicious intent or discrimination when an account is closed.”

Related: Senator Warren doesn’t take the crypto bait in debanking hearing

Coinbase chief legal officer Paul Grewal and MARA CEO Fred Thiel provided written statements for the Feb. 6 hearing suggesting the FDIC responded with regulatory overreach and a lack of transparency. On Feb. 5, US lawmakers with the Senate Banking Committee held a similar hearing, including claims the Securities and Exchange Commission used its authority to influence banks providing services to crypto companies.

Both House and Senate hearings followed the FDIC under acting chair Travis Hill, a Donald Trump appointee, releasing 790 pages to the public showing correspondence between the federal agency and financial institutions with crypto clients. A US District Court released other letters in December 2024 in response to a Freedom of Information Act lawsuit led by Coinbase.

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