Coinbase, a leading cryptocurrency exchange, has escalated its efforts to obtain transparency from U.S. regulatory bodies concerning their treatment of digital assets. Paul Grewal, Coinbase’s Chief Legal Officer, announced on October 21 via X that the company has filed two new Freedom of Information Act (FOIA) requests aimed at shedding light on the regulators’ ongoing scrutiny of cryptocurrency operations among U.S. banks.
The first FOIA request targets specific measures, such as the reported cap on deposits from crypto companies, which the Federal Deposit Insurance Corporation (FDIC) has allegedly set at 15% of a bank’s total deposits. This request also covers similar actions by other banking regulators that may be impacting financial institutions’ dealings with digital assets. The second request seeks information on how these regulators have handled previous crypto-related FOIA inquiries, aiming to understand their broader approach to cryptocurrency regulation.
According to reports, the FDIC and other banking regulators have implemented these deposit caps without the customary process of public commentary, which is typically required under U.S. law. These measures are part of a broader regulatory examination of the crypto industry’s integration with traditional banking systems.
Legal Challenges and Previous Lawsuits
This series of FOIA requests continues Coinbase’s proactive legal strategy, following previous lawsuits filed against the U.S. Securities and Exchange Commission (SEC) and the FDIC. These lawsuits, initiated in June, accuse these agencies of failing to comply with earlier FOIA requests related to public disclosures. In 2023, Coinbase specifically requested the SEC to release documents concerning the classification of Ether and details regarding the regulatory status of its ETH staking-as-a-service offering, which led to charges against Coinbase for alleged violations of securities laws.
The regulatory status of Ether staking pools remains a contentious issue. While spot Ether is classified as a commodity by U.S. regulators, the classification of ETH staking pools is still under debate, highlighting the complexity of regulatory frameworks for emerging crypto activities.
Coinbase’s Advocacy Efforts
Amid these regulatory challenges, Coinbase has also been active in the political arena. Its advocacy project, Stand with Crypto, launched a political action committee (PAC) in March to support candidates who favor sensible digital asset regulations. This move is part of Coinbase’s broader strategy to influence policy-making that could shape the future of cryptocurrency in the U.S.
The upcoming November U.S. presidential election sees significant differences in the crypto policies of the candidates. Republican nominee Donald Trump has expressed intentions to make America “the crypto capital of the world,” presenting a stark contrast to the more reserved stance of Democrat Kamala Harris. Although Vice President Harris is considered more crypto-friendly than President Joe Biden, her position is less enthusiastic compared to Trump, as noted by Galaxy Research.
Coinbase’s recent FOIA filings underscore the ongoing conflict between the crypto industry and regulatory bodies, highlighting the challenges of navigating compliance within a rapidly evolving market. These actions reflect the broader industry’s need for clarity and stability in regulatory practices, which is crucial for fostering innovation and growth in the sector. As regulatory landscapes continue to evolve, Coinbase’s proactive legal and political engagement may play a pivotal role in shaping the future interactions between crypto businesses and regulatory frameworks.
Featured image credit: Marco Verch via CCNull
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