In an effort to clarify the regulatory landscape for cryptocurrencies in the United States, Coinbase has recently submitted two Freedom of Information Act (FOIA) requests to the Federal Deposit Insurance Corporation (FDIC). This move signifies the company’s proactive stance toward navigating the complexities of the regulatory environment surrounding digital assets. The requests were filed on October 18 and are delegated through History Associates Incorporated, a third-party firm that typically specializes in archival research and document retrieval.
One of the primary aims of the requests is to seek clarity on a controversial 15% deposit cap, allegedly enforced on banking institutions servicing digital asset companies. According to Coinbase’s Chief Legal Officer, Paul Grewal, this cap has reportedly been applied to several banks, including Signature Bank and Silvergate Bank, which cater to cryptocurrency-related businesses. The request delves deep into historical interactions and communications among FDIC board members, financial institutions, and officials from the Federal Reserve and the Treasury’s Office of the Comptroller of the Currency (OCC) dating back to June 2022.
Coinbase’s strategic inquiry into this deposit cap aims to ensure transparency about how such regulations affect the broader crypto ecosystem. Should the FDIC choose to invoke exemptions under the FOIA and deny access to specific documents, Coinbase insists on receiving detailed justifications for the non-disclosure. This insistence on transparency highlights Coinbase’s commitment to fostering a clear regulatory environment essential for the sustainable growth of the crypto industry.
The second FOIA request focuses on monitoring how federal agencies handle queries related to cryptocurrency. Coinbase is seeking logs of FOIA requests submitted to both the FDIC and OCC from January 1, 2022, to October 1, 2023. By requesting that these logs be in a text-searchable format, Coinbase emphasizes the need for accessibility and transparency in the retrieval of this data.
This request is significant not merely to understand agencies’ regulatory decisions but also to analyze their overall approach toward information disclosure. Awareness of how frequently agencies grant or deny FOIA requests can illuminate trends in regulatory behavior and possibly reveal inconsistencies in how cryptocurrency-related information is treated. Through careful examination of these logs, Coinbase aspires to identify patterns that may shed light on the administrative processes at play within these regulatory bodies.
The dispute surrounding the treatment of crypto-related banks hasn’t gone unnoticed in the industry. Caitlyn Long, CEO of Custodia Bank, has vocally criticized federal banking regulators, pointing to a culture of uncertainty and what she terms “lawlessness” toward institutions involved with cryptocurrencies. Long’s comments reflect a growing concern that the lack of clear guidance from regulators puts both banks and crypto businesses at risk.
Coinbase’s recent FOIA requests are part of a broader trend of seeking accountability in regulatory bodies. This is underscored by the fact that these requests are distinctly separate from other FOIA requests made by Coinbase in July 2023, which specifically targeted the Securities and Exchange Commission (SEC). In those earlier requests, Coinbase sought to shed light on the SEC’s rationale behind its enforcement actions against crypto firms and its criteria for classifying certain digital assets as securities.
Continuing the trajectory of action against regulatory ambiguity, Coinbase filed a motion for partial summary judgment on the same day as their new FOIA requests. The goal is to compel the SEC to release internal documents that detail the agency’s enforcement strategies related to the crypto industry. This move comes in response to delays the SEC has experienced in producing requested documents, raising concerns about the regulator’s commitment to transparency.
Coinbase’s dual FOIA requests represent a concerted effort to challenge and clarify the regulatory framework governing cryptocurrency. By seeking essential documents that could reshape their understanding of regulatory interactions, Coinbase is taking a noteworthy step in addressing existing ambiguities that have long plagued the cryptocurrency sector. As the landscape continues to evolve, initiatives like these illuminate the necessity for regulatory clarity in promoting innovation, protecting consumers, and fostering a stable financial ecosystem.
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