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Coinbase received conditional approval from the U.S. Office of the Comptroller of the Currency, or OCC, to operate as a trust bank, the company said Thursday.
If finalized, the crypto exchange will be able to operate payment products in addition to its custody business under federal supervision, Coinbase’s chief legal officer, Paul Grewal, told CNBC.
“Over the long haul we will be able to explore, with the OCC, offering not just custody products but also other infrastructure products, particularly around payments, that we think will expand and extend crypto payments in all sorts of new and interesting and important directions,” Grewal said.
The company made clear it will not become a commercial bank, take retail deposits or engage in fractional reserve banking — the practice employed by big banks of keeping just a fraction of customers’ deposits in reserve while lending out the rest. Still, a trust charter would give it the legal authority, access to banking infrastructure and regulatory credibility to move, hold and settle money more efficiently — and perhaps set it up to compete more with PayPal or Square.
The approval is a preliminary agreement that Coinbase’s application meets key regulatory requirements, subject to fulfilling certain conditions before it can actually operate as a trust bank.
Coinbase would be regulated directly by the OCC, one of the three main federal banking regulators, rather than be subject to state-based regulation, which is a major pain point for companies in fast-moving industries like crypto.
Up until this point, that’s been “the only way to go about this,” Grewal said, nodding to President Donald Trump’s promise to make the U.S. the “crypto capital of the world” in his second term. The Biden administration before it famously maintained an anti-crypto stance that the industry believes hampered its growth and leadership on the global stage.
State-by-state regulation creates a headache for many fast-paced startups playing in the heavily regulated financial services space. Instead of a single rulebook, companies face 50 slightly different ones that can not only slow growth but also increase costs.
“We wouldn’t be pursuing this if we didn’t think there were important opportunities in crypto infrastructure, including payments, that lie ahead,” Grewal said. “The OCC’s conditional approval is an important recognition by the agency that they want to see those products and services, particularly around payments and custody, developed here in the U.S., first and foremost.”
Coinbase has established a payments strategy centered on making stablecoins — particularly Circle-issued USDC — a mainstream global payment method. Last year, it launched Coinbase Payments, a product for platforms and merchants that includes wallet integrations and stablecoin checkout. It also launched a payments protocol with Shopify built on its in-house blockchain, Base. Separately, it partnered with Shopify and Stripe to allow their merchant partners to accept the USDC stablecoin.
Coinbase CEO Brian Armstrong has also said the company has a “stretch goal” to make USDC the No. 1 stablecoin in the world, a position currently held by Tether’s USDT, and that he aims to make Coinbase “the No. 1 financial services app in the world” in the next few years. Armstrong has also become one of the most consequential private-sector voices on Capitol Hill when it comes to crypto policy, particularly in recent negotiations around the Clarity Act, crypto market structure legislation.
