Ripple CTO David Schwartz has expressed strong concerns about the Federal Deposit Insurance Corporation (FDIC) following revelations about its actions toward the cryptocurrency sector. Schwartz’s criticism comes after Coinbase uncovered instances of the FDIC discouraging banks from supporting crypto-related businesses. These actions have drawn attention to the regulatory barriers impacting the digital currency ecosystem.
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FDIC’s Push to Curb Crypto Activities
Documents revealed in court filings and Coinbase’s investigation have shed light on the FDIC’s approach to cryptocurrency oversight. As per the news, in 2022, the FDIC instructed several banks to halt dealing with cryptocurrencies due to emerging regulatory questions. A Vaughn Index from Coinbase exposed communications over 20 with the FDIC that discouraged institutions from doing business with the crypto industry.
One of the documents from March 2022 informed of a specific recommendation made by the FDIC to cease all banking related to digital assets. In another case, some national-scale banks needed to conduct risk analyses before diversifying crypto offerings. They said that these actions, per the FDIC, were meant to rectify risks associated with financial stability and operations safety. However, these disclosures have received criticism from crypto enthusiasts who consider such moves unwelcome and hinder development.
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Crypto Community’s Call for Regulatory Transparency
David Schwartz responded strongly to these findings, questioning the rationale for enforcement actions without clear regulations. According to Schwartz, governments should not condemn firms to penalties when they are in doubt about legal expectancies. His comments are symptomatic of a much larger problem that many within the crypto community have with regulation.
Coinbase’s Chief Legal Officer, Paul Grewal, also called for greater transparency, asserting that the FDIC’s stance may hinder the growth of the crypto ecosystem. To address these issues, Coinbase has pledged to file Freedom of Information Act requests to uncover additional details about the FDIC’s tactics.
Conclusion
The revelations surrounding the FDIC’s actions have intensified concerns about regulatory practices in the crypto industry. As calls for transparency grow, stakeholders hope for more precise guidelines to support innovation while ensuring financial stability.
Also Read: Ripple vs. SEC: Legal Chief Slams SEC’s Ongoing Crypto Attacks
Maxwell Mutuma
Maxwell is a crypto-economic analyst and Blockchain enthusiast, passionate about helping people understand the potential of decentralized technology. He writes extensively on topics such as blockchain, cryptocurrency, tokens, and more for top publications such as Coingape, Coin Edition, and The Coin Republic. His goal is to spread knowledge about this revolutionary technology and its implications for economic freedom and social good.