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Key Takeaways
Community banks oppose Coinbase’s charter bid:
The Independent Community Bankers of America (ICBA) formally objected to Coinbase’s application for a National Trust Company Charter, citing concerns regarding governance, risk management, and profitability related to the crypto market’s volatility.
Coinbase accuses banks of protectionism:
Coinbase’s Chief Legal Officer, Paul Grewal, criticised the ICBA’s stance, claiming traditional banks are trying to maintain “regulatory moats” to keep crypto-focused firms from gaining equal footing under federal oversight.
Charter approval could reshape crypto regulation:
If granted, the charter would allow Coinbase to operate under direct OCC supervision, bridging traditional banking and digital asset services — a move that could set a precedent for other crypto firms seeking federal trust status.
The Independent Community Bankers of America (ICBA), a trade group for smaller US banks, formally opposed Coinbase’s bid for a National Trust Company Charter.
Overview
In a letter to the Office of the Comptroller of the Currency (OCC) on November 3, the ICBA argued that Coinbase’s proposed charter
“fails to meet the requirements for approval of a national bank charter”
under existing laws and regulations.
It raised concerns around governance, profitability during market downturns, the legal status of an interpretive opinion that opens crypto-related activities for trust charters, and the risk posed by Coinbase’s core revenue link to crypto markets.
ICBA urged the OCC to either reject the application or extend the review period to allow for more public scrutiny of its legal and prudential implications.
Coinbase Fires Back: Regulatory Moats
On Tuesday, Coinbase’s Chief Legal Officer, Paul Grewal, took to X to push back hard. He noted,
“Imagine opposing a regulated trust charter because you prefer crypto to stay… unregulated. That’s ICBA’s position. It’s another case of bank lobbyists trying to dig regulatory moats to protect their own. From undoing a law to go after rewards to blocking charters, protectionism isn’t consumer protection.”
Coinbase maintains it is
not seeking to become a bank
through this charter, but rather is asking for a regulatory structure that allows custody and trust-accounting activities under federal oversight. They intend to
“bridge the gap between the crypto economy and the traditional financial system.”
What’s at Stake & What Happens Next
If approved, this charter would bring parts of Coinbase’s operations under direct federal oversight via the OCC, giving it legitimacy and potentially easing friction with other financial infrastructure.
But the review may take time: reports suggest the OCC could take 12 to 18 months to complete the application. Meanwhile, other crypto/fintech firms — such as Circle, Ripple, and Paxos — are also pursuing similar federal banking / trust-charter pathways.
Banks worry about risk — especially around downturns in cryptocurrency value, the novel legal structuring of crypto custody under bank-type rules, and the potential for instability in stress events. On the flipside, proponents argue that bringing crypto firms under chartered regulation enhances consumer protections and oversight, and could be key for integrating traditional finance with new digital-asset models.