PANews January 4 news, according to reports from Decrypt, based on unredacted documents obtained by Coinbase, U.S. banks attempted to offer services to customers based on public blockchain networks but seemed to be discouraged by the Federal Deposit Insurance Corporation (FDIC). This disclosure stems from a large volume of unredacted crypto-related communications between the FDIC and member banks. The cryptocurrency exchange Coinbase, headquartered in San Francisco, obtained these documents through the Freedom of Information Act (FOIA). Last month, Coinbase obtained a heavily redacted version of 23 such letters. Due to a court order, the content of these letters (and two new letters) was disclosed (almost) in full today.
One letter was sent by the FDIC's New York office to a member bank in March 2022, detailing how the federal agency learned that the bank planned to launch a 'bank digital deposit' program running on a public blockchain. The name of this public blockchain has not yet been disclosed. In the letter, the FDIC seems dissatisfied with the bank's choice to use a public blockchain instead of a private permissioned network. Blockchains like Ethereum and Solana are decentralized and permissionless, meaning their activities are entirely public and cannot be overridden by third-party human administrators. In contrast, private blockchain networks (such as those used by nation-states to issue central bank digital currencies) restrict who can use them and for what purposes.
The FDIC clearly does not support member banks launching products on omnipotent, fully transparent networks. The regulator instructed a New York bank in a letter from March 2022 that any products launched on public blockchains must undergo a new detailed review process. Other disclosed letters show that the FDIC ordered member banks to stop implementing services related to the buying and selling of Bitcoin. Portions of the same unredacted letter from last month show that the FDIC instructed member banks to 'suspend all activities related to crypto assets.'
