US banks seeking to offer customer services built on public blockchain networks have been discouraged from doing so by the Federal Deposit Insurance Corporation, documents released on Friday revealed.

The revelation came thanks to a raft of newly unredacted cryptocurrency-related correspondence between the Federal Deposit Insurance Corporation (FDIC) and member banks. San Francisco-based cryptocurrency exchange Coinbase obtained the documents through the Freedom of Information Act, or FOIA. Last month, Coinbase secured significantly revised versions of 23 such letters.

Thanks to a court order, the contents of those letters have been revealed – along with two new ones open Today in its entirety (nearby).

One such letter, sent in March 2022 from the FDIC's New York office to a member bank, details how the federal agency learned that the bank was planning to roll out a "digital bank deposit" program designed to run on a public blockchain network. The public blockchain name remains revised.

In the letter, the FDIC appears to address the issue of a bank choosing to use a public blockchain instead of a private, permissioned network. Blockchains like Ethereum and Solana are decentralized and permissionless, meaning that activity on them is completely 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, place limits on who can use them and for what purpose.

Clearly, the FDIC is not a fan of member banks launching products on fully transparent networks. The regulator instructed the Bank of New York in a March 2022 letter to undergo a new, detailed review process before launching any products on public blockchains.

Other messages revealed on Friday show the Federal Deposit Insurance Corporation (FDIC) ordering member banks to stop performing services related to buying and selling bitcoin. Sections of the same letters were unredacted last month Show The Federal Deposit Insurance Corporation (FDIC) is asking member banks to “temporarily halt all activities related to crypto assets.”

Paul Grewal, chief legal officer at Coinbase, described today's revelations as further evidence of the Biden administration's alleged initiative being waged against the cryptocurrency industry through banking regulations that have come to be known as “Operation Chokepoint 2.0(Borrowing the name from an Obama-era scheme that targeted firearms dealers and payday lenders.)

“They demonstrate a coordinated effort to stop a wide range of cryptocurrency activities,” Grewal said He said On X (formerly Twitter) of the FDIC letters on Friday.