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

The disclosure came courtesy of a trove of newly unredacted crypto-related correspondences between the FDIC and member banks. San Francisco-based cryptocurrency exchange Coinbase obtained the documents via the Freedom of Information Act, or FOIA. Last month, Coinbase secured heavily redacted versions of 23 such letters. 

Thanks to a court order, the contents of those letters—and two new ones—were revealed today in their (near) entirety. 

One of those letters, sent in March 2022 from the FDIC’s New York office to a member bank, detailed how the federal agency had learned that the bank planned to roll out a “Bank Digital Deposit” program built to run on a public blockchain. The name of that public blockchain remains redacted. 

In the letter, the FDIC appears to take issue with the bank opting 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 fully public and cannot be overridden by third-party human administrators. By contrast, private blockchain networks, like those used by nation states to issue central bank digital currencies, place limits on who can use them and for what purpose.

The FDIC is apparently not a fan of member banks launching products on anything-goes, fully transparent networks. The regulator instructed the New York bank in the March 2022 letter to submit to a new, detailed review process before launching any products on public blockchains. 

Other letters disclosed Friday show the FDIC ordering member banks to halt the implementation of services related to the buying and selling of Bitcoin. Sections of the same letters unredacted last month showed the FDIC instructing member banks to “pause all crypto asset-related activity.”  

Coinbase Chief Legal Officer Paul Grewal touted today’s revelations as further proof of an alleged Biden administration initiative waged against the crypto industry via banking regulations that’s become known as “Operation Chokepoint 2.0” (borrowing the name from the Obama era scheme that targeted firearms dealers and payday lenders).

“They show a coordinated effort to stop a wide variety of crypto activity,” Grewal said on X (formerly Twitter) of Friday’s FDIC letters.

Bo Hines, a former Republican nominee for the House of Representatives, has been named by President-elect Donald Trump to be the Executive Director of the Presidential Council of Advisers for Digital Assets.

Per a Truth Social post from Trump, Hines will oversee a “new advisory group composed of luminaries from the crypto industry” and work alongside David Sacks, Trump’s pick for the White House AI and Crypto Czar.

“In his new role, Bo will work with David to foster innovation and” growth in the digital assets space, while ensuring industry leaders have the resources they need to succeed,” Trump posted. “Together, they will create an environment where this industry can flourish, and remain a cornerstone of our nation’s technological advancement.”

Hines was the Trump-endorsed Republican House nominee in North Carolina’s 13th District in 2022, but lost the race to Democratic rival Wiley Nickel. During that race, Hines received backing from former FTX Digital Markets CEO Ryan Salame, who later went to prison for unrelated campaign finance law violations, among other charges.

The 29-year-old Hines ran again for the House this year in the state’s 6th District, but lost in the primaries, placing fourth among Republican candidates. He does not appear to have a substantial public history of making comments related to Bitcoin or cryptocurrency.

“Thank you, Mr. President! It will be the honor of a lifetime to serve in your next administration. Thank you for everything you have done and continue to do for our country,” Hines wrote on X (formerly known as Twitter) on Sunday. “I am thrilled to work alongside the brilliant David Sacks to ensure that this industry will thrive and remain a cornerstone of our nation’s technological advancement.”

Alongside Hines, Trump also named former Andreessen Horowitz venture capitalist Sriram Krishnan as the Senior Policy Advisor for Artificial Intelligence at the White House Office of Science and Technology Policy. Krishnan, who departed from the prominent VC firm in November, will also work closely with Sacks.

Donald Trump and his political allies are plugging away at plans to stockpile Bitcoin at a national level in the U.S. Treasury. 

And now, with the asset’s price repeatedly soaring to new peaks since Election Day, some U.S. states are following suit.  

So far, three states are fielding proposals to establish strategic Bitcoin reserves, while digital asset advocates are calling for other local governments to do the same.

Here’s which states are considering topping up their coffers with the world’s oldest and most valuable digital currency. 

Texas

Texas legislators will soon weigh in on whether or not they should establish a strategic Bitcoin reserve. 

Texas State Representative Giovanni Capriglione proposed a bill in December that calls for the Lone Star State to create a Bitcoin stockpile. 

The draft legislation stipulates that Texas must hold the Bitcoin for at least five years. The cryptocurrency must be kept in cold storage—that is, on some kind of a device that is not connected to the internet—and the assets cannot be used to make transactions outside of Texas, according to the bill.

“A strategic Bitcoin reserve aligns with Texas’s commitment to fostering innovation in digital assets and providing Texans with enhanced financial security,” the bill reads.

Finally, the proposal also enables Texans to donate to the state’s Bitcoin fund.

Pennsylvania

The Pennsylvania House of Representatives put forth a bill in November that called for the establishment of a strategic Bitcoin reserve.

Under the Bitcoin bill, Pennsylvania’s Treasurer would be able to buy Bitcoin with “up to 10%” of the State General Fund, Rainy Day Fund, and the State Investment Fund.

Tapping 10% of the State General Fund would allow the Pennsylvania Treasury to purchase nearly $1 billion worth of Bitcoin.  

“Bitcoin, which has appreciated significantly over the years, can help Pennsylvania keep pace with inflation and economic change,” the state’s lawmakers said in a legislative memo published on November 12. 

Ohio 

Ohio State Representative Derek Merrin on December 17 proposed a bill to establish a strategic Bitcoin reserve in the Buckeye State. 

The Ohio Bitcoin Reserve Act calls for the creation of a Bitcoin fund in the state Treasury. It also vests Ohio’s State Treasurer with discretionary power to purchase the asset.

“Ohio must embrace technology and protect tax dollars from eroding,” Merrin said Tuesday in an X post. 

Although some details of how the reserve will work remain unclear, the draft legislation is expected to serve as a framework for Ohio lawmakers to build out in 2025.

Edited by Andrew Hayward