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US Bank Regulator Cautions Banks on Crypto but Stops Short of Halting Crypto Business

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In a series of documents released on Friday, the Federal Deposit Insurance Corporation (FDIC) clarified that it advised banks to pause direct engagement in cryptocurrency activities in 2022 and 2023, but did not order banks to stop offering banking services to crypto companies. This comes amid complaints from the crypto industry, which claims widespread “debanking” by traditional banks. The release of these documents follows a lawsuit filed by Coinbase, which sought to reveal the FDIC’s supervisory actions towards banks interacting with the crypto sector.

The FDIC’s guidance, provided in “pause letters” sent to various banks, emphasized the risks of directly holding crypto assets, but did not mandate that banks sever ties with crypto clients or cut off banking services for crypto companies. In contrast, the regulator issued instructions to pause or slow down crypto ventures and requested detailed clarifications from banks exploring direct involvement with crypto.

Coinbase’s legal team, alongside other crypto advocates, has criticized the regulator’s stance as an attempt to stifle the sector. Meanwhile, the FDIC published a 2022 internal memo to further clarify the difference between traditional banking services for crypto firms—such as offering deposit accounts—and direct crypto activities, like holding or trading crypto assets. The memo suggests stricter scrutiny for direct crypto engagement.

The timing of the document release is significant, coinciding with President-elect Donald Trump’s upcoming inauguration. His administration is expected to announce a broader crypto policy overhaul, with reports indicating that he may issue an executive order encouraging regulators to ease their stance on the industry.

Phantom Wallet Expands to Coinbase’s Base Layer-2 Network

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Phantom Expands Multi-Chain Support to Coinbase’s Base Network

Phantom, a multi-chain crypto wallet renowned for its user-friendly interface, has extended its capabilities to Coinbase’s Base network, a layer-2 solution built on Ethereum. This marks a significant milestone for Phantom as it continues to grow its reach within the blockchain ecosystem. With Base integration, Web3 developers and users can now leverage Phantom’s services for secure asset custody, seamless token transfers, and enhanced interoperability. The wallet, which was established in 2021, already supports major networks like Solana and Polygon.

The announcement was made by Phantom via its official X (formerly Twitter) account earlier this week. According to the statement, users can now swap tokens such as Base and Solana directly within the wallet. Additionally, purchasing assets like ETH and USDC on the Base network has been streamlined, with payment options including credit cards, Coinbase, and Apple Pay. This integration aims to make transactions more accessible to a wider audience, fostering increased adoption of decentralized finance (DeFi) tools and applications.

Phantom’s integration with the Base network is expected to bring substantial benefits to the ecosystem. By combining its intuitive wallet functionality with the scalability and cost-efficiency of Base, users gain access to a variety of DeFi and NFT applications. This expansion further bridges the gap between different blockchain communities, empowering both seasoned crypto enthusiasts and newcomers to explore decentralized technologies with ease.

The Base network itself has gained momentum in the blockchain space as a solution for addressing Ethereum’s scalability challenges. With Phantom’s support, Coinbase’s Base is likely to attract a broader audience of developers and users, solidifying its position as a go-to layer-2 solution for Ethereum-powered projects. This collaboration highlights the growing trend of interoperability in the blockchain world, as wallets and platforms work together to deliver a seamless and inclusive Web3 experience.

MicroStrategy Stock Turns Negative Despite Bitcoin Reaching $100,000 Milestone

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Cryptocurrency-related stocks took a downturn on Thursday, even after Bitcoin reached a historic milestone, surpassing $100,000 for the first time. MicroStrategy, a software company that has become closely associated with Bitcoin due to its large holdings of the cryptocurrency, saw its stock slip by 4.8%, reversing an earlier gain of more than 7%. Other crypto-linked companies also experienced losses, with Riot Platforms and Mara Holdings falling around 5% and 4%, respectively. Robinhood Markets and Coinbase Global also saw declines, with drops of 2.7% and over 3%, respectively.

MicroStrategy has increasingly become a proxy for Bitcoin itself, with the company’s stock price closely tied to the value of the cryptocurrency. Since 2020, when it first began purchasing Bitcoin, MicroStrategy’s stock has skyrocketed by more than 2,700%. Similarly, Coinbase, which operates a cryptocurrency exchange, and Robinhood, which allows users to trade Bitcoin, have seen their stocks rise due to their exposure to the digital currency. Meanwhile, Mara Holdings and Riot Platforms focus on Bitcoin mining and digital infrastructure.

Despite Thursday’s setbacks, these companies have posted significant gains year-to-date. MicroStrategy has surged nearly 512%, Robinhood has risen more than 205%, and Coinbase has increased by over 84%. Mara Holdings, however, has underperformed, with a gain of just over 5%.

Investor enthusiasm around Bitcoin has been fueled by expectations of a more crypto-friendly regulatory environment following the November election of President-elect Donald Trump. The belief that his administration would be more relaxed on cryptocurrency regulations has led to increased investments in the sector.

“This price surge, particularly with Bitcoin reaching $100,000, is significant not only as a psychological milestone but because it increases the likelihood of more institutional and traditional finance investment,” said Pascal St-Jean, CEO of 3iQ. St-Jean further noted that the growing accessibility of digital assets to investors also contributed to the price appreciation.

In addition, traders have shown increased interest in leveraged MicroStrategy exchange-traded funds (ETFs), which use debt to amplify potential gains from the underlying assets. According to JPMorgan, these leveraged ETFs accounted for a significant portion of the $11 billion inflow into crypto funds in November, reflecting the heightened investor activity in the cryptocurrency sector.