Coinbase has become the latest crypto firm to receive conditional approval from the Office of the Comptroller of the Currency for a national trust banking charter, the company announced on Thursday.
But the publicly traded company said in a statement that it wasn’t planning on becoming a bank in the traditional sense.
“Coinbase is not becoming a commercial bank,” America’s biggest crypto exchange said. “We will not be taking retail deposits. We will not be engaging in fractional reserve banking.”
Coinbase joins a long list of digital asset firms pushing further into the traditional finance space. The charter will allow Coinbase to serve as a crypto custodian on a federal basis, managing assets for larger entities.
A number of top crypto companies have received conditional approval, including Ripple, Circle, Crypto.com, and Paxos.
Donald Trump-backed decentralised finance platform, World Liberty Financial, has applied for the charter, with hopes of getting institutions on board with using its native stablecoin, USD1.
The idea with the charter is that crypto companies will be able to hold client assets and handle trade settlement within a federally regulated structure.
“Conditional approval means that Coinbase is positioned to build the next chapter of finance with the regulatory confidence that our partners, customers, and the broader market need,” added Coinbase.
Not everyone is happy with crypto companies getting conditional approval.
The banking lobby in December urged the OCC to reject Coinbase’s application for a national trust bank charter on the grounds that the exchange has “demonstrably flawed risk and control functions” and operates under governance that “prevents independent oversight.”
And the American Banking Association US’ largest banking lobby in February urged the OCC to slow its review of crypto companies’ charter applications.
Banks are worried that crypto-native companies are muscling in on their turf. One of the biggest gripes from traditional banks comes down to stablecoins: Companies like Coinbase want to pay users rewards for holding the digital tokens; banks have said this is unfair and could lead them to lose their deposit base.
Mathew Di Salvo is a news correspondent with DL News. Got a tip? Email at mdisalvo@dlnews.com.
