Coinbase fights back against bank lobby pressure to block trust charter – Blockonomi

TLDR

• Coinbase has 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 about untested crypto custody practices and the possibility of Coinbase struggling 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 and expects a decision within 12 to 18 months.

Coinbase has faced strong opposition from the Independent Community Bankers of America (ICBA) regarding its application of the trust charter. 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 strong opposition to Coinbase’s application in a letter to the Office of the Comptroller of the Monet (OCC). The group argued that the crypto exchange’s proposal contains untested elements, especially in the area of ​​cryptocurrency custody. Additionally, the ICBA stated that Coinbase’s subsidiary would struggle to remain profitable during market downturns.

The ICBA also raised concerns about the wider implications for the public interest. The banking lobby group called on the OCC to deny the application or extend the review period. The ICBA’s letter highlighted the risks associated with allowing a crypto company to operate as a trust company.

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

“Imagine opposing a regulated trust charter because you prefer crypto to remain unregulated,” Grewal further wrote X. He further added that the banks are trying to block progress by putting up regulatory barriers to protect their own interests. Coinbase has emphasized that it has no intention of becoming a bank through this application.

OCC review of Coinbase’s application could take months

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

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