FDIC Unveils Crypto Supervision Docs: Banks Hit by Silence and Suspensions

Washington – The Federal Deposit Insurance Corporation (FDIC) has dropped a bombshell on the crypto community, releasing 175 documents that shed light on its stringent supervision of banks engaging in or seeking to engage in crypto-related activities.

The acting chairman, Travis Hill, admitted past criticisms of the FDIC’s approach to crypto assets and blockchain. ‘The agency’s stance previously gave off the impression it was closed for business if institutions were interested in blockchain or distributed ledger technology,’ he stated.

Under Hill’s leadership, a comprehensive review of all supervisory communications with banks offering crypto-related products or services has been underway. The FDIC has released documents including correspondence with 24 institutions and additional correspondence with other entities. These documents show that banks faced significant resistance from supervisors, ranging from repeated requests for more information to multi-month periods of silence.

The leaked documents also reveal directives from supervisors to pause, suspend, or refrain from expanding crypto- or blockchain-related activities. This has effectively sent a message to banks that moving forward with crypto initiatives would be incredibly difficult, if not impossible. As a result, most banks have simply given up on their crypto endeavors.

Looking ahead, the FDIC is reevaluating its supervisory approach to crypto activities. This includes replacing Financial Institution Letter (FIL) 16-2022 and providing institutions with a clear pathway to engage in crypto-related activities while adhering to safety and soundness principles. The FDIC also aims to collaborate with the President’s Working Group on Digital Asset Markets established by an executive order on January 23, 2025.

The release of these documents marks a significant shift in the FDIC’s transparency efforts, aiming to fulfill the spirit of the Freedom of Information Act (FOIA) request beyond what is required. A link to the FDIC’s FOIA Reading Room can be accessed here.