The cryptocurrency industry’s banking crisis in the U.S. appears to be easing as two congressional committees shed light on the treatment of crypto businesses by regulators. In a hearing of the House Financial Services Committee, Coinbase Chief Legal Officer Paul Grewal testified about the abuse of authority from regulators who created barriers between banks and crypto firms.
Republican lawmakers widely agreed with Grewal’s complaints about “regulation by exhaustion” and his view that financial regulators such as the FDIC publicly insisted they weren’t against crypto while privately directing banks away from the industry. Democrats, however, flagged concerns with President Donald Trump’s own crypto business efforts and argued that cautioning banks against ties with the volatile, fraud-laden sector was appropriate.
The congressional scrutiny comes as Coinbase has been making progress in its legal pursuit of FDIC documents under the Freedom of Information Act. A judge in the U.S. District Court for the District of Columbia expressed frustration with the FDIC’s resistance to the request and demanded answers on accusations that the regulator may have destroyed relevant documents.
The FDIC has since released more documents and its Acting Chairman, Travis Hill, ordered a review of supervisory communications with banks about crypto. While the FDIC has faced much of the criticism, Senator Cynthia Lummis also revealed an internal Federal Reserve document that she said provided “hard proof of Operation Chokepoint” – the industry’s term for the informal actions undertaken by regulators to pressure U.S. banks to debank crypto.
The congressional interest in the crypto industry’s banking challenges is expected to continue next week with another hearing entitled “A Golden Age of Digital Assets: Charting a Path Forward.” This development suggests a potential shift in the regulatory landscape for cryptocurrencies in the U.S., with lawmakers increasingly scrutinizing the actions of financial regulators and seeking to create a more supportive environment for the industry.
Tags: cryptocurrency, debanking, congressional hearings, Coinbase, FDIC, Federal Reserve
Source: https://www.coindesk.com/policy/2025/02/06/crypto-s-debanking-worries-hit-another-big-stage-in-u-s-house