Coinbase Gets Conditional Approval From Banking Regulator—But Isn't Launching a Bank

Coinbase signaled on Thursday that it plans to refine its services after receiving conditional approval for a national trust bank charter from the Office of the Comptroller of the Currency (OCC).

In a blog post, the San Francisco-based crypto exchange said that it is not becoming a commercial bank. Rather, the charter will provide the firm with “federal regulatory uniformity” when it comes to custodying various types of assets on behalf of customers, it said.

The development underscores how crypto-native companies are becoming increasingly tied to the traditional financial system. Coinbase said that the shift will enable the exchange to create new products that cater to both individuals and institutions.

Coinbase highlighted payments as an area that the charter will allow it to expand into. The company already has a deep relationship with stablecoin issuer Circle, which gained approval for a national trust banking charter alongside several competitors last year.

Coinbase Custody Trust Company obtained a limited purpose trust charter from the New York Department of Financial Services in 2018. That established the firm as a qualified custodian, allowing it to safeguard securities on behalf of professionals like investment advisors.

In the blog post, Coinbase said its work with the Department served as a cornerstone toward building operational maturity and institutional trust. The firm said that it will continue to operate under the regulator’s supervision and its stringent BitLicense framework.

Coinbase made clear that it doesn’t plan on accepting deposits from individuals like a traditional bank. What’s more, it doesn’t expect to engage in fractional reserve banking.

Operating under the oversight of a federal regulator, the OCC’s charter removes potential barriers to the exchange’s interstate expansion when it comes to the banking realm. Still, Coinbase’s exchange is already available across the U.S. in all 50 states.

Under the GENIUS Act, a federal framework for stablecoins signed into law last year, the OCC has supervisory authority over qualified stablecoin issuers. The legislation recognizes national trust banks as those permitted to become part of that group. What’s more, the GENIUS Act allows stablecoin issuers to operate without navigating a patchwork of state-level licenses.

When Circle received OCC approval last year, the Office’s Comptroller of the Currency, Jonathan V. Gould, declared that “new entrants into the federal banking sector are good for consumers, the banking industry and the economy.”

Ripple, BitGo, and Paxos Trust Company and Fidelity Digital Assets received a green light at the same time, underscoring how stablecoins are reshaping corporate structures for crypto-native firms. In 2021, Anchorage Digital became the first federally chartered digital asset bank, being awarded that status under the Biden administration.

Not long after the OCC’s wave of approvals last year, Sen. Elizabeth Warren raised the alarm regarding World Liberty Financial’s efforts to attain a charter. She argued in a statement that Gould’s refusal to delay review for the President Donald Trump-banked crypto firm amounted to a “sham.”

“We have never seen financial conflicts of this magnitude and no crypto market structure legislation should pass Congress without guardrails to stop this kind of corruption,” she added.

The Bank Policy Institute, a trade group representing America’s largest banks, urged the OCC to reject a spate of charter applications in October. The organization argued that allowing crypto-native firms to offer bank-like products without greater supervision could “blur the statutory boundary of what it means to be a ‘bank,’” while heightening systematic risk.

Still, the crypto industry’s growing bondage to the traditional financial system has shown no signs of slowing down. In early March, Kraken secured approval for a Federal Reserve “master account,” giving the crypto exchange access to the Fed’s core payment services.

Editor's note: This story was updated after publication with additional details.