The FDIC Lied to Us All: Uncensored Documents Reveal the Truth About the Crypto Pause Letters

During a Senate hearing, Acting FDIC Chairman Travis Hill confirmed that the agency is revising its stance on cryptocurrency.

The Federal Deposit Insurance Corporation (FDIC) has announced plans to revise its policies, allowing U.S. banks to manage cryptocurrency assets and offer tokenized deposits without prior regulatory approval.

During a Senate hearing on Thursday, Acting FDIC Chairman Travis Hill confirmed that the agency is revising its stance on cryptocurrency. He explained that the FDIC is re-evaluating its previous policies that had discouraged banks from engaging with crypto assets.

Hill noted that financial institutions interested in entering the crypto space often faced significant delays, excessive scrutiny, and pushback from regulators. This hindered their efforts to participate in the growing sector.

Once the revisions are finalized, tokenized deposits could merge checking accounts with blockchain technology, marking a key shift in banking infrastructure as it adapts to the rapidly growing digital asset sector, Barron’s reported.

The announcement comes as the FDIC also made public 175 internal documents outlining its previous interactions with banks about cryptocurrency. The release follows a court order stemming from a lawsuit by Coinbase, which sought greater transparency on the regulatory measures impacting the crypto sector.

These documents specifically pertain to the “pause letters” sent in 2022, advising 24 financial institutions to halt or avoid offering services related to cryptocurrency.

“Our decision to release these documents reflects a commitment to enhance transparency, beyond what is required by the Freedom of Information Act (FOIA), while also attempting to fulfill the spirit of the FOIA request,” Hill said in a statement.

Coinbase had filed a Freedom of Information Act (FOIA) request with the FDIC in March 2023, seeking details about a reported 15% deposit cap on crypto-friendly banks by the regulator. The FDIC released relevant documents in December 2024, though they were heavily redacted. A less censored version was published on January 3, 2025.

Coinbase's Chief Legal Officer Paul Grewal noted that the uncensored version included two additional letters that were previously withheld by the FDIC.

In a recent post on X, Grewal alleged that the FDIC is still withholding additional “pause letters” that could shed more light on the regulator's actions.

“We were right. The previous @FDICgov leadership lied to us all. There were many, many more pause letters. We are reviewing now–and so can you (link in thread). THANK YOU ACTING CHAIRMAN HILL,” Grewal wrote.

According to Hill, the newly released documents reveal that requests from banks to offer crypto-related services were consistently met with resistance from the FDIC. In many cases, the regulator demanded additional information from banks and, in some instances, remained largely unresponsive for extended periods.

“Both individually and collectively, these and other actions sent the message to banks that it would be extraordinarily difficult — if not impossible — to move forward. As a result, the vast majority of banks simply stopped trying,” Hill stated in the press release.

The FDIC employed a strategy in which it first sent banks a letter urging them to suspend crypto-related services and requesting more details. After receiving responses, the regulator would place the requests on hold, ultimately leading banks to abandon their crypto offerings.

The documents indicate that the FDIC identified several key factors in its decision to halt crypto-related services. These included concerns over the volatility of Bitcoin (BTC), potential reputational risks for the banks involved, and the need to protect consumers from potential harm.