Coinbase exec criticizes banks’ pushback to crypto charter application

The Independent Community Bankers of America (ICBA) has voiced strong opposition to Coinbase’s application for a National Trust Company Charter in the United States — a decision that could disrupt traditional banks' interests as Coinbase aims to venture deeper into traditional finance. In a letter sent on Monday to the US Office of the Comptroller of the Currency (OCC) — the agency in charge of approving banking applications — the ICBA stated it 'strongly opposes' Coinbase’s subsidiary applying for a trust charter.

The ICBA raised concerns over 'untested' elements related to crypto custody, suggesting that Coinbase’s subsidiary may 'struggle to achieve and maintain profitability during crypto bear markets.' This criticism reflects the banking industry's skepticism toward cryptocurrency firms entering the financial mainstream.

Reacting to the ICBA's opposition, Paul Grewal, Coinbase’s chief legal officer, took to X (formerly Twitter) on Tuesday. Grewal argued: “Imagine opposing a regulated trust charter because you prefer crypto to stay… unregulated. That’s ICBA’s position. It’s another case of bank lobbyists trying to dig regulatory moats to protect their own.” His comments highlight the ongoing tension between traditional banks and cryptocurrency firms.

Coinbase initially applied for the national trust charter in October, aiming to “bridge the gap between the crypto economy and the traditional financial system.” Reports suggest that the OCC’s review process may take between 12 and 18 months. This extended timeline could delay Coinbase's potential entry into the traditional banking space.

In its letter, the ICBA urged the OCC to either deny Coinbase's application or allow for a more extended public review of the company’s business plan. The ICBA pointed to the 'legal, prudential, and public interest implications' of the company’s proposed operations.

Despite stating it has 'no intention of becoming a bank,' Coinbase’s move reflects a broader trend among cryptocurrency firms. Other players like Ripple Labs and Circle have also applied for national bank charters, following the US government's new legislation establishing a framework for payment stablecoins. Notably, Ripple USD (RLUSD) and USDC (USDC) are examples of issued stablecoins.

The OCC has yet to announce official decisions on Coinbase or Ripple’s applications. The review of Ripple’s application was expected to conclude last week, but as of Tuesday, no public statements have been made. Additionally, Cointelegraph reached out to the OCC and Ripple for comments, but no responses were received at the time of publication.