FDIC Crypto "Pause Letters"
A distributed analysis proof of concept
In February, the FDIC released nearly 1,000 pages of documents related to its supervision of banks that engaged in -- or sought to engage in -- crypto-related activities. Attention has focused on the documents where the FDIC asked a bank to pause or terminate its crypto-related activities (so-called "pause letters"), and the resulting debanking experienced by digital asset firms.
But the documents offer much more. The letters, memos, emails, and reports contain rich detail tracing the FDIC's interactions with the bankers over a period of several years, as well as the agency's concerns, information requests, and directives. They offer the public a rare glimpse of the nuts-and-bolts of the bank supervision and supervisory policy-making.
Unfortunately, accessing this knowledge is not easy. The documents were released in a handful of large scanned PDF files, one with almost 800 pages. The released files are not searchable, and their low quality and extensive redaction makes them resistant to optical character recognition (OCR).
Nor is it necessarily easy to glean insights from the documents, even if you slog through them one at a time. The documents speak in the distinct dialect of bank supervision, which few outsiders have experience with (and even many bankers struggle to understand). And, as interesting as individual bank stories are, the real value of the documents lies in the patterns and trends that emerge when they are analyzed together.
A Better Way
We decided to create a better way to explore and analyze these documents -- one that takes advantage of technology developments that have transformed the software world in the last few years. It’s experimental and the work continues, but we invite you to check it out by exploring the Document Dashboard, Document Gallery, Event Dashboard, or the other artifacts and resources released in the first wave of this project. You can even download the data. (Just keep in mind, this is a work in progress.)
About this Project
This project is an effort to help the financial services, technology, and legal communities better understand the FDIC's approach to regulating crypto-related activities during the period 2021-24 and to learn from the unusual trove of documents lifting the veil on the confidential supervisory process.
FinReg Foundry, in collaboration with financial services lawyers at Davis Wright Tremaine, has created a collection of experimental artifacts to help the industry access and analyze these documents in new and better ways. The initial set of artifacts include a version of the documents converted to markdown format, additional AI-extracted and AI-generated metadata, and a portal with dashboards and views (and, as mentioned above, data downloads) to help users navigate and understand the content.
Working with all interested in the project, we will continue to enrich this and other artifacts, as well as review the machine-generated content using both human domain expertise and digital tools. This isn't legal advice -- it's a public service and (we hope) a collaborative community effort.
About FinReg Foundry
FinReg Foundry is an advisory firm that combines traditional advice with digital artifacts that make regulatory knowledge accessible at scale in compliance, legal, software development, and data science processes. The artifacts produced in this project demonstrate a range of innovative methods]that FinReg Foundry employs in its work with clients. To learn more or explore ways to work with us, contact us at info@finregfoundry.com.
THIS PROJECT AND ANY COMMUNICATIONS IN CONNECTION WITH IT DO NOT CONSTITUTE LEGAL ADVICE. MAY CONSTITUTE ATTORNEY ADVERTISING.