ICBA pushes back on Coinbase national trust charter

The Office of the Comptroller of the Currency last week conditionally approved a national trust charter for cryptocurrency exchange platform Coinbase’s subsidiary, Coinbase National Trust Co. .The Independent Community Bankers of America called the approval, on April 2, “a grave mistake that will only serve to put U.S. consumers at risk.” According to the trade group, Coinbase’s application included unsound risk and control functions along with profitability and resolution risks. “Its application fails to meet requirements of the National Bank Act and the OCC’s own regulations and standards,” the ICBA stated. “We also continue to have significant concerns with the OCC’s chartering rule for national trust banks, which is inconsistent with its statutory authority laid out in legislative history, judicial interpretations and the agency’s own internal precedent.” Coinbase Institutional is not becoming a commercial bank, nor will it take retail deposits, said Coinbase Institutional Co-CEO Greg Tusar. “This charter is about bringing federal regulatory uniformity to the custody and market infrastructure business we have been building for years,” he added. “The OCC charter was designed precisely for this purpose — to provide clear oversight over assets in safekeeping — and that is exactly how we intend to use it.” Coinbase was founded in 2012 by Brian Armstrong and Fred Ehrsam. Today, the company has more than 100 million users, and, as of 2024, was the top U.S.-based cryptocurrency exchange and the world’s largest bitcoin custodian. The ICBA last week also objected to Zero Hash US LLC’s proposed national trust charter. The company provides a business-to-business embedded infrastructure platform that allows companies to offer crypto and stablecoin services. According to ICBA, Zero Hash’s business model exceeded traditional trust powers, and the structure of the charter enabled regulatory arbitrage. The ICBA claimed the OCC’s quickening pace of approvals outpaced its ability “for deliberate and transparent policymaking.” Coinbase’s approval continued the trend of crypto issuers receiving national trust charters under the Trump administration. Last December, crypto issuers BitGo, Ripple and Circle received conditional approval from the OCC to establish national trust banks. Also that month, the OCC authorized national trust charters for Fidelity Digital Assets and Paxos Trust Company. In February, the OCC granted conditional approval for a national trust bank charter to Stripe-owned stablecoin infrastructure provider Bridge. The Kansas City Fed granted crypto exchange Kraken Financial a one-year, limited-purpose account in March. The American Bankers Association pushed back, calling on regulators to wait until final GENIUS Act rules are settled.