Coinbase, the largest crypto exchange in the US, has reached a major milestone after receiving key approval from the central banking regulator, which could open up a wider market for the company.
Coinbase Wins Major OCC Approval
On Thursday, Coinbase announced that it received conditional approval from the Office of the Comptroller of the Currency (OCC) to spin off Coinbase National Trust Company, marking an important step toward becoming a federally regulated crypto custodian.
In an official statement, Coinbase explained the scope of the charter, explaining that the company does not become a commercial bank and will not take retail deposits or participate in a fractional reserve bank.
“This charter is about bringing the uniformity of federal regulation to the market infrastructure business that we have been building for years. The OCC charter was designed precisely for this purpose – to provide clear oversight of assets in safekeeping – and that is exactly how we intend to use it,” the announcement read.
The OCC’s conditional approval allows Coinbase to “build the next financial chapter,” the company noted, bolstered by regulatory confidence, and confirms its approach to “cooperating with regulators, earning their trust, and operating with the highest standards.”
In addition, the approval shows that the government’s regulatory framework is changing to keep up with the changing landscape that crypto has been slowly shaping.
In an interview, Greg Tusar, Co-CEO of Coinbase Institutional, confirmed that “the ability to have a government structure for our babysitting business is important,” adding that “this is about us expanding our reach and being able to run a new business that we may not have been able to do before.”
Crypto Trust Banks Face Opposition
Coinbase applied for a charter last October and has now joined the list of firms that have received the approval of the central bank regulator. As reported by Bitcoinist, the OCC approved conditional banking charters for Ripple, Circle, BitGo, Paxos, and Fidelity in December.
In February, the stablecoin platform The Bridge, owned by Stripe, and the crypto exchange Crypto.com announced that they also received conditional approval from the OCC to establish a national trust bank. However, US banks have expressed concern that the authorization could blur the lines between banking activities and lead to regulatory judgement.
About two months ago, the American Bankers Association (ABA) asked the banking regulator to postpone the review of applications for crypto bank charters, suggesting that approvals should wait until important regulatory uncertainties are resolved.
In its letter, the ABA asked for patience as the emerging regulatory frameworks are established, suggesting that the review process continue while the US Congress finalizes the rules that will ultimately govern many of the OCC’s most recent charter applicants.
The banking group cited uncertainty surrounding emerging business models, the need for increased transparency in insurance application and decision-making processes, and the absence of finalized government guidance as key reasons for the proposed delay.
US Senator Elizabeth Warren also sent a letter to Comptroller Jonathan Gould asking the bank regulator to pause the review of the Trump Family’s main crypto venture, World Liberty Financial, which applied for a national trust charter in January.
Total crypto market capitalization is at $2.28 trillion on the one-week chart. Source: TOTAL on TradingView
Featured image from Unsplash.com, Chart from TradingView.com
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