FDIC pays $188K, updates FOIA after crypto lawsuit

FDIC will pay $188,440 and update FOIA policies after settling a lawsuit over withheld 'pause letters' that urged banks to limit crypto services, boosting transparency in crypto regulation.

The Federal Deposit Insurance Corporation (FDIC) has agreed to pay $188,440 in legal fees and revise its Freedom of Information Act (FOIA) policies following a lawsuit filed by Coinbase. The dispute arose from the FDIC’s refusal to release so-called “pause letters” or “cease and seek letters” sent to banks, which urged them to halt or restrict cryptocurrency-related services. A court determined that the FDIC violated federal disclosure laws by withholding these documents without conducting individual reviews. As part of the settlement, the FDIC will release the previously withheld documents and update its FOIA procedures to improve transparency. This case has brought to light dozens of letters that allegedly pressured banks to limit their involvement in crypto activities, marking a notable development in the ongoing debate over regulatory oversight and transparency in the digital asset sector.