Prominent banking groups have voiced strong opposition to Coinbase’s application for a national trust bank charter, urging the Office of the Comptroller of the Currency (OCC) to deny the bid. Two influential lobbying organizations, the Independent Community Bankers of America (ICBA) and the Bank Policy Institute (BPI), have submitted letters asserting that Coinbase’s request poses systemic and legal concerns, and that the company must offer more detailed disclosures about its business plan.
In a tweet highlighting the situation, Coinbase Chief Legal Officer Paul Grewal criticized the reaction from the banking sector, suggesting that their opposition reflects a desire for the cryptocurrency market to remain unregulated. Grewal pointed to what he described as bank lobbyists attempting to establish regulatory barriers to protect their interests, rather than focusing on consumer protection.
The ICBA contends that Coinbase’s application does not meet the statutory standards required for such a charter, warning that its approval would set a dangerous precedent within the U.S. banking system. The group emphasized that the public portion of Coinbase’s filing lacks the necessary clarity to assess safety and legality, criticizing the company for relying on an OCC interpretive letter that was issued without public notice. This, they argue, does not legally validate non-fiduciary activities proposed by Coinbase.
The BPI echoed these sentiments, arguing that for the OCC to approve Coinbase’s charter, the company must demonstrate that it is predominantly engaged in fiduciary activities. Additionally, the BPI raised concerns about whether Coinbase’s trust could manage or support stablecoins, which could potentially circumvent existing legislation that prohibits yield-bearing stablecoins.
Coinbase officially filed for its national trust charter last month with the aim of enhancing its Prime Vault and Prime Custody services. This expansion would allow the company to integrate various financial services, including custody, staking, financing, and trading, which bank representatives warn could lead to untested “inter-affiliate dependencies” and expose customers to increased risks should the trust encounter difficulties.
Jonathan Gould, head of the OCC, recently addressed the potential implications of stablecoins at an American Bankers Association conference. He described these digital currencies as “not an overnight deposit threat,” suggesting that, if well-regulated, stablecoins could actually enhance competition for community banks against larger financial institutions.
This development marks a significant intersection between traditional banking and the burgeoning cryptocurrency sector. Ruchir Gupta, co-founder of Gyld Finance, emphasized that the fear among banks stems not from market volatility, but from the increased competition posed by a federally regulated Coinbase. He noted that if Coinbase were to receive the charter, it would not only become a federally regulated institution but could also pave the way for other similar firms, representing a fundamental shift in the financial landscape.
In addition to Coinbase, several other companies, including Crypto.com, Circle, Ripple, Paxos, and Bridge (the stablecoin arm of Stripe), are also in the process of applying for national trust charters. Notably, Erebor Bank received conditional approval from the OCC last month, following the previous charter granted to Anchorage Digital, signaling a growing interest among cryptocurrency institutions in entering the federally regulated sphere.
