America’s community banks want regulators to kill Coinbase’s banking dreams.
On Monday, the Independent Community Bankers of America urged the Office of the Comptroller of the Currency to reject Coinbase’s application for national trust bank charter, arguing the exchange has “demonstrably flawed risk and control functions” and operates under governance that “prevents independent oversight.”
The 12-page letter attacks Coinbase’s plan to launch its Coinbase National Trust Company on multiple fronts: legal authority, safety and soundness, and resolution risk.
“The application fails to meet statutory chartering standards, presents compounding safety and soundness risks, and would set a dangerous precedent for the structure of the US banking system,” the ICBA wrote.
At stake is crypto’s place in American banking.
Just as Donald Trump’s administration loosens the rules for crypto companies and institutions, and investors alike clamour for more crypto products, banks are fighting back on whether crypto custody belongs inside the regulated banking perimeter.
Regulatory moats
Paul Grewal, Coinbase’s chief legal officer, dismissed the opposition as protectionism.
“Imagine opposing a regulated trust charter because you prefer crypto to stay… unregulated,” Grewal wrote on X on Tuesday. “That’s ICBA’s position. It’s another case of bank lobbyists trying to dig regulatory moats to protect their own.”