Coinbase’s application for a national trust bank charter faces opposition from banking lobbies like the ICBA and BPI, who argue it raises systemic risks and fails statutory standards. This push aims to integrate crypto custody with regulated finance, potentially reshaping competition in the sector.
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Banking lobbies urge OCC to deny Coinbase’s charter due to vague filings and potential precedents for unregulated crypto activities.
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ICBA and BPI highlight concerns over inter-affiliate dependencies and untested risks in Coinbase’s proposed structure.
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As of November 2025, multiple crypto firms including Crypto.com and Circle have similar applications pending, signaling a broader industry shift toward federal oversight.
Coinbase national trust bank charter application sparks battle with ICBA over regulation. Discover how crypto firms challenge banking status quo for safer, integrated services. Stay informed on evolving finance landscape.
What is Coinbase’s National Trust Bank Charter Application?
Coinbase’s national trust bank charter application seeks federal approval for its subsidiary, Coinbase National Trust Co., to operate as a regulated trust entity focused on crypto custody and related services. Filed in October 2025, it aims to expand offerings like Prime Vault and Prime Custody, integrating staking, financing, and trading under OCC supervision. This move addresses regulatory clarity amid growing demands for compliant crypto infrastructure.
Why Are Banking Lobbies Opposing Crypto Charter Applications?
The Independent Community Bankers of America (ICBA) and the Bank Policy Institute (BPI) submitted comment letters to the Office of the Comptroller of the Currency (OCC) on November 4, 2025, urging denial of Coinbase’s application. They cited the filing’s vagueness, lack of detailed business plans, and potential to undermine the U.S. banking system’s structure. The ICBA specifically criticized reliance on an OCC interpretive letter issued without public notice, arguing it cannot justify non-fiduciary activities and raises safety concerns due to Coinbase’s risk controls and governance.
The BPI echoed these worries, stating approval would exceed the OCC’s authority unless Coinbase engages predominantly in fiduciary activities. It also flagged risks related to stablecoin management, potentially circumventing the GENIUS Act’s restrictions on yield-bearing stablecoins. According to the groups, the proposed setup could foster inter-affiliate dependencies, exposing customers to untested receivership risks if the trust encounters issues.
Coinbase Chief Legal Officer Paul Grewal responded sharply on social media, accusing the ICBA of preferring crypto remain unregulated to maintain competitive edges. “Imagine opposing a regulated trust charter because you prefer crypto to stay unregulated. That’s ICBA’s position… bank lobbyists trying to dig regulatory moats… protectionism isn’t consumer protection,” Grewal stated.
OCC head Jonathan Gould, speaking at the American Bankers Association conference in late 2025, downplayed immediate threats from stablecoins, noting they are “not an overnight deposit threat” and could enable community banks to compete with larger players if regulated appropriately. This perspective underscores the tension between innovation and established financial safeguards.
Frequently Asked Questions
What Does Coinbase’s National Trust Bank Charter Mean for Crypto Users?
Coinbase’s charter would allow its trust subsidiary to provide federally regulated custody services, enhancing security for digital assets like staking and trading. This could reduce counterparty risks for users by separating custody from exchange operations, offering greater protection under OCC oversight. Experts anticipate improved institutional adoption as a result.
How Might Banking Lobbies’ Opposition Affect the Crypto Industry?
Opposition from groups like the ICBA could delay or block charter approvals, keeping crypto firms outside traditional banking rails and limiting their ability to offer integrated services. However, ongoing applications from entities like Anchorage Digital, which already holds a charter, suggest the industry is advancing toward regulation despite resistance. This dynamic may lead to clearer guidelines for stablecoins and custody over time.
Key Takeaways
- Regulatory Pushback: ICBA and BPI’s letters highlight fears of systemic risks from crypto’s entry into banking, focusing on governance and legal compliance issues.
- Industry Momentum: With applications from Crypto.com, Circle, Ripple, Bridge, and Paxos in the pipeline, plus Erebor Bank’s recent conditional approval, crypto integration with federal oversight is accelerating.
- Competitive Implications: Approval could enable Coinbase to compete directly with banks, fostering innovation in custody and stablecoins while challenging protectionist barriers.
Conclusion
The clash over Coinbase’s national trust bank charter application exemplifies the broader tension between traditional banking lobbies and the evolving crypto sector, where groups like the ICBA seek to preserve regulatory moats amid pushes for integrated finance. Expert insights from figures like Ruchir Gupta of Gyld Finance emphasize this as a structural shift, driven not by volatility but by competition. As more applications queue up, the OCC’s decisions could pave the way for a more inclusive financial system. Investors and users should monitor developments closely for opportunities in regulated crypto services.
Ruchir Gupta, co-founder of Gyld Finance, provided further context: “What banks really fear isn’t volatility—it’s competition. If Coinbase gets this charter, it effectively becomes a federally regulated financial institution, and others will follow. That’s a structural shift.” He also noted that banks’ confidentiality critiques are tactical, given the norm of protecting business details in OCC filings. This dispute underscores a battle over precedent, with banks wary of normalizing crypto under federal banking law.
Other crypto players are advancing similarly. Crypto.com, Circle, Ripple, Bridge (Stripe’s stablecoin arm), and Paxos have filed or announced national trust charter applications. Erebor Bank secured conditional OCC approval in October 2025, building on Anchorage Digital’s prior charter. These steps indicate crypto institutions are increasingly entering federally supervised territory, potentially transforming how digital assets interface with conventional finance.
