In short
- Major banking groups have written letters to the Office of the Comptroller of the Currency to block Coinbase’s trust bid.
- Coinbase CLO Paul Grewal said the opposition shows that banks want crypto to remain unregulated.
- In addition to Coinbase, Circle, Ripple, Paxos and Bridge are the other companies that are pursuing federal charters.
Office of the Controller of the Currency faces pressure from banking lobbyists as crypto exchange Coinbase requires a fair way in regulated finance.
Two of Washington’s most influential banking lobbies, the Independent Community Bankers of America (ICBA) and the Banking Policy Institute (BPI), have urged the Office of the Comptroller of the Currency to block The Coinbase application for a national trust bank card.
The groups submitted separate comment letters to the OCC on Monday, warning that Coinbase’s application “raises systemic and legal concerns” and should be denied unless the company discloses more details about its business plan.
“Imagine the opposition to a regulated trust card because they prefer crypto to remain … unregulated,” Coinbase Chief Legal Officer Paul Grewal. he tweeted in response. “This is ICBA’s position … bank lobbyists trying to dig regulatory ditches … protectionism is not consumer protection.”
The ICBA said in its letter that the public portion of Coinbase’s filing was “too vague to judge security and legality,” accusing the company of relying on an OCC interpretive letter “issued without public notice,” which it said cannot legally justify untrustworthy activities.
He also questioned whether Coinbase’s “risk control and flaw control features” and “non-independent governance structure” make the plan unsafe.
The BPI, which represents the country’s largest and foreign banks, said the approval would “exceed the OCC’s authority under federal law” unless Coinbase is “primarily engaged in fiduciary activities.”
He is also encouraged in his letter for the OCC to clarify whether the Coinbase trust could manage or return stablecoinswarning that such arrangements could circumvent the GENIUS Act’s ban on performance stablecoins.
Coinbase filed a national trust card early last month to expand its Prime Vault and Prime Custody operations, services that integrate custody with staking, funding and trading offered by Coinbase affiliates.
Banking groups say the setup could create “inter-affiliate dependencies” and expose customers to “unproven receivables risk” if the trust fails.
Jonathan Gould, head of the Office of the Comptroller of the Currency, recently he told the participants at the American Bankers Association conference that stablecoins are “not a threat to overnight deposits” and could help community banks compete with larger institutions if properly regulated.
A “structural change”
“This is where two financial worlds collide,” said Ruchir Gupta, co-founder of institutional marketplace Gyld Finance. Decrypt.
“What banks really fear is not volatility – it’s competition,” he added. “If Coinbase gets this card, it effectively becomes a federally regulated financial institution, and others will follow. It’s a structural change.”
Gupta added that criticism of banks’ confidentiality is “more tactical than substantive,” explaining that OCC charter applications “almost always contain confidential business details to protect competitive positioning.”
He called the dispute “a battle for precedent,” where banks “fear the normalization of crypto under federal banking law more than they fear Coinbase itself.”
Even in line
Crypto.com, circle, Ripple, Bridge (stablecoin arm of Stripe), and Paxos they have also submitted or announced national trust card applications.
Erebor Bank received conditional OCC approval last month, then Anchorage Digital previous paper, which shows how crypto institutions are pushing into federally controlled territory.
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