FDIC Plans to Ease Crypto Restrictions for Banks: Details

The Federal Deposit Insurance Corporation (FDIC) is set to revise its guidelines, allowing U.S. banks to engage with cryptocurrency businesses without seeking prior regulatory permission. This marks a major policy shift, as the agency had previously discouraged banks from working with crypto firms.

Why Is the FDIC Changing Its Approach?

Acting Chairman Travis Hill revealed that the FDIC is reevaluating its stance on digital assets. In a statement, Hill acknowledged that past policies created a hostile environment for banks exploring blockchain and cryptocurrency.

• The FDIC released 175 documents detailing past interactions with banks regarding crypto activities.

• Previous guidance forced banks to pause or halt crypto-related operations.

• A legal battle between Coinbase and the FDIC pushed the agency to disclose its communications with financial institutions.

The shift comes as lawmakers investigate debanking practices—where financial institutions cut off services to crypto businesses without clear justification.

Past Restrictions and Legal Battles

For years, banks wanting to work with crypto firms faced bureaucratic resistance. The FDIC’s past communications show:

• Delayed responses: Some banks waited months for approval, often receiving no clear answer.

• "Pause letters": Many institutions received notices urging them to stop engaging with crypto.

• Legal scrutiny: The agency was accused of quietly enforcing an anti-crypto stance.

“The documents that we are releasing today 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,” Hill said in a statement. 

Coinbase, one of the largest crypto exchanges, sued the FDIC in 2024 under the Freedom of Information Act (FOIA), forcing the regulator to release internal documents. These records confirmed what many in the industry suspected—the FDIC had been actively discouraging banks from supporting crypto businesses.

What Does This Mean for Crypto and Banking?

With the FDIC now revising its policies, banks may soon be able to:

• Offer crypto-related services without needing special approval.

• Form partnerships with blockchain firms without regulatory roadblocks.

• Integrate digital assets into their existing financial products.

Hill emphasized that the FDIC’s new approach will balance innovation with regulatory safeguards, ensuring financial stability while giving banks the freedom to explore blockchain opportunities.

Hill confirmed that the FDIC will replace previous guidelines, particularly Financial Institution Letter (FIL) 16-2022, which forced banks to report any crypto-related activities for review. This change could remove a significant hurdle for financial institutions looking to embrace blockchain and crypto-based services.

The Senate is also weighing in on the issue. Both Democrats and Republicans have voiced concerns over debanking, with some arguing that previous FDIC policies unfairly targeted crypto firms. Even Senator Elizabeth Warren, known for her tough stance on crypto, has acknowledged the problem and is calling for action.

Warren’s letter to President Trump outlined thousands of cases of banking denials, with over half linked to major financial institutions like Bank of America, JPMorgan Chasea and Wells Fargo.