Coinbase Fights Back Against Bank Lobby’s Push to Block Trust Charter

TLDR

• Coinbase applied for a National Trust Company Charter to bridge the gap between crypto and traditional finance.
• The Independent Community Bankers of America (ICBA) strongly opposes Coinbase’s trust charter application.
• ICBA raised concerns over untested crypto custody practices and the potential for Coinbase to struggle during market downturns.
• Coinbase’s legal officer criticized the ICBA for trying to block regulatory progress to protect banks’ interests.
• The OCC is reviewing Coinbase’s application, with a decision expected within 12 to 18 months.

Coinbase has faced strong opposition from the Independent Community Bankers of America (ICBA) regarding its trust charter application. The crypto exchange applied for a National Trust Company Charter in October 2023. The move is part of Coinbase’s efforts to connect the crypto industry with traditional finance.

ICBA Objects to Coinbase’s Trust Charter Application

The ICBA expressed its firm opposition to Coinbase’s application in a letter to the Office of the Comptroller of the Currency (OCC). The group argued that the crypto exchange’s proposal includes untested elements, especially in crypto custody. In addition, the ICBA stated that Coinbase’s subsidiary would struggle to remain profitable during market downturns.

The ICBA also raised concerns about the broader implications for public interest. The bank lobby group called on the OCC to either reject the application or extend the review period. The ICBA’s letter emphasized the risks associated with allowing a crypto firm to operate as a trust company.

Coinbase has strongly defended its bid for a National Trust Company Charter. In response to the ICBA’s objections, Coinbase’s legal officer, Paul Grewal, criticized the bank lobby. He stated that the ICBA’s stance supports unregulated crypto practices.

“Imagine opposing a regulated trust charter because you prefer crypto to stay unregulated,” Grewal wrote on X. He further added that the banks are attempting to block progress by creating regulatory barriers to protect their own interests. Coinbase has emphasized that it does not intend to become a bank through this application.

OCC Review of Coinbase’s Application May Take Months

The OCC’s review process for Coinbase’s application could take up to 18 months. While the decision remains pending, Coinbase’s push to bridge the gap between crypto and traditional finance continues. The crypto exchange has made clear its commitment to complying with regulations and fostering innovation within the financial sector.

The OCC has not yet publicly decided on similar applications from other companies, such as Ripple and Circle. As of now, Coinbase’s trust charter application remains under scrutiny, with potential for a lengthy review.

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