Recent developments in the legal tussle between Coinbase and the Federal Deposit Insurance Corporation (FDIC) have unfolded, marked by Coinbase’s assertive move to uphold transparency in regulatory practices. They are contesting the FDIC’s dismissal of a Freedom of Information Act (FOIA) request, aiming to elucidate communication referred to as “pause letters” sent to banks regarding crypto services.
Coinbase is now petitioning the court for more comprehensive disclosures from the FDIC. This includes demanding an understanding of how the agency has managed and documented these letters, alongside requests for all denial letters issued under FOIA from 2020 through 2024.
Insights on Pause Letters
Reports indicate that the FDIC initially classified these “pause letters” under a broad exemption, labeling them as “confidential bank examination records.” This approach has prevented necessary distinction between factual information and analytical documentation, raising questions about regulatory transparency.
Coinbase pointed out that it necessitated multiple court orders and extensive document requests before obtaining crucial records. This prolonged endeavor, they argue, highlights the FDIC’s persistent reluctance to provide clarity on actions impacting the crypto sector.
Paul Grewal, Coinbase’s Chief Legal Officer, publicly criticized the FDIC’s practices, maintaining that their current tactics to restrict information flow are both unacceptable and unsustainable.
We are continuing our quest for transparency through a motion that calls for additional depositions from the FDIC regarding their FOIA processes. The agency must adhere to the spirit of the law…
— paulgrewal.eth (@iampaulgrewal) August 5, 2025
Review of FDIC’s Transparency Practices
Emerging reports have pointed out that the FDIC’s internal guidelines instruct examiners to completely withhold any documentation classified under Exemption 8 without making a distinction between factual and deliberative content. Such policies can lead to significant gaps in transparency.
During a previous hearing, it was revealed that the FDIC lacked a formal procedure to manage litigation-related information for FOIA requests. Initial searches only looked at documents shared with the agency’s Office of Inspector General, missing critical items, including emails that directly referenced “pause letters.”
Impact on Banking Access
A recent survey by AIMA indicated that a staggering 75% of cryptocurrency funds are encountering significant challenges in securing basic banking services. This situation has led to operational disruptions for exchanges like Coinbase, limiting their transactional capabilities.
As banks become increasingly cautious regarding any semblance of regulatory risks, a court order requiring further testimony may uncover the individuals responsible for endorsing the “pause letters.” This could clarify the rationale behind the FDIC’s extensive information suppression.
In its recent motion for additional discovery, Coinbase seeks every FOIA denial letter issued by the FDIC over the past four years. The appeal includes demands for sworn statements from FDIC personnel regarding their rationale for maintaining secrecy on specific records.
Image credit goes to Credit Sesame, chart sourced from TradingView.
