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- Coinbase calls for the OCC to withdraw policies restricting banks from crypto services.
- The firm’s push aligns with a shifting regulatory stance under new U.S. leadership.
- Existing federal laws already authorize banks to offer digital asset services.
Coinbase Global Inc. is pressing U.S. banking regulators to clarify existing policies to enable banks to provide custody and trading execution services for cryptos. The company seeks regulatory adjustments to facilitate partnerships between banks and crypto firms, including itself.
Coinbase Pushes for Regulatory Clarification
According to Bloomberg, Coinbase has urged the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board of Governors, and the Federal Deposit Insurance Corp. (FDIC) to reassess their positions on banks offering digital asset services.
The company argued that an interpretive letter from the OCC effectively acts as an application process, restricting banks from entering the cryptocurrency market. Coinbase called for its withdrawal, citing concerns about regulatory uncertainty.
Additionally, the company requested that the Federal Reserve and the FDIC confirm that state-chartered banks under their supervision can provide and outsource custody and execution services for cryptocurrencies.
According to a separate letter from legal representatives retained by Coinbase, existing federal laws already authorize banks to offer digital asset services. The exchange argued that regulators need to formally recognize this authority to remove barriers for banks looking to engage in the crypto sector.
Changing Regulatory Landscape
Coinbase’s push comes as regulatory conditions for banks engaging in digital assets shift under the administration of President Donald Trump.
New leadership at federal agencies has signaled a more crypto-friendly approach, prompting a reconsideration of prior restrictions.
One significant change included the repeal of the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin No. 121.
The rule had made it impractical for banks to provide crypto custody by requiring them to list custodied assets as liabilities on their balance sheets.
Between March 2022 and May 2023, regulatory scrutiny kept banks hesitant about expanding their crypto-related services.
During this period, the FDIC issued directives to certain financial institutions, instructing them to pause planned digital asset activities and submit additional information.
Coinbase now argues that the easing of restrictions should be formalized to create a clear path for banks to engage in the crypto market.
Banking Industry’s Role in the Crypto Economy
Coinbase has consistently advocated for a regulatory framework that allows financial institutions to support the crypto economy. The company has emphasized the importance of enabling banks to collaborate with third-party providers for trading and exchange services.
As the primary custodian for most U.S. spot Bitcoin and Ether exchange-traded funds (ETFs), Coinbase maintains that broader banking participation would strengthen the crypto ecosystem.
Regulatory discussions on banking and crypto integration are ongoing. The Senate Banking, Housing, and Urban Affairs Committee is set to hold a hearing addressing the issue of “debanking.”
Coinbase’s letter was submitted ahead of this hearing, underscoring the company’s stance that regulatory adjustments should align with evolving market conditions.
Meanwhile, Coinbase recently secured registration with the United Kingdom’s Financial Conduct Authority under anti-money laundering regulations. This approval allows the company to expand its operations within the UK under local compliance standards.
Disclaimer
In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.
