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.

Citi is aiming to launch a service for the custody of crypto assets in 2026, an executive at the bank told CNBC, as Wall Street giants expand their footprint in the digital currency space.

Biswarup Chatterjee, global head of partnerships and innovation in the services business at Citi said the bank has been developing a crypto custody service for the last two-to-three years and is making progress.

“We have various kinds of explorations … and we’re hoping that in the next few quarters, we can come to market with a credible custody solution that we can offer to our asset managers and other clients,” Chatterjee said.

For a long time, traditional financial instutions have stayed away from cryptocurrencies like bitcoin and ether. However, President Donald Trump’s administration has built a more favorable regulatory environment for digital assets in the U.S. as new laws such as the GENIUS Act has looked to regulate specific areas including stablecoins. This has enabled traditional financial institutions to launch products and services to do with digital assets.

In the world of crypto, custody comes in many forms including a digital asset exchange holding digital coins or the institution itself doing self-custody. Custodian services enable a bank to hold assets on behalf of its clients. This could for example, include shares in companies. There are also companies that have sprung up specifically related to crypto custody.

Chatterjee said the upcoming custody service would involve Citi holding the native cryptocurrency.

There are risks with all forms of custody such as cyberattacks that lead to theft of assets. Banks may offer an alternative because they are heavily regualted and have a history in the custody of assets.

For Citi, Chatterjee said the lender is looking at both an in-house developed technology solution for custody as well as potential partnerships with third-parties.

“We may have certain solutions that are completely designed and built in-house that are targeted towards certain assets and certain segment of our clients, whereas may we may use a … third party, lightweight, nimble solution for other kind of assets,” Chatterjee told CNBC.

“So we’re not currently ruling out anything.”

Not all Wall Street banks are convinced on the custody strategy. JPMorgan CEO Jamie Dimon said this year that while the bank will let clients buy cryptocurrencies, it will not custody the asset.

Coinbase is the top performer in the S&P 500 in June, boosted by positive regulatory updates, product launches and, of course, its very inclusion in the benchmark stock index at the end of May.

The crypto exchange’s outperformance in the S&P 500 extends back to the April 8 market low, just after President Donald Trump’s initial sweeping tariffs announcement sent stocks sinking.

Coinbase is now on pace for its best month since November, third straight monthly gain — 43% in June alone — and its first three-month rally since the end of 2023. On Thursday, the stock hit its highest level since the day of its initial public offering in 2021.

“The S&P 500 inclusion, the Senate’s passage of the GENIUS Act and very strong performance of Circle negated the false narratives for Coinbase and people are waking up,” Oppenheimer analyst Owen Lau told CNBC.

Restraints lifted

“The two things holding Coinbase back were the issues of fee compression — it hasn’t happened and in fact, Coinbase has been generating positive earnings consistently, which is why they were included in the S&P 500 — and regulatory uncertainty,” he said. “Many people don’t believe there will be any consensus coming out of Congress … the fact is we’re seeing the passage of the GENIUS Act.”

The GENIUS Act establishes the first federal framework for dollar-pegged stablecoins, granting sweeping authority to the Department of Treasury and opening the door to banks, fintechs, and retailers.

Even with Coinbase’s 44% run this month, the stock has room to appreciate further, according to Devin Ryan, head of financial technology research at Citizens. He said the market isn’t fully connecting the dots around Coinbase’s close relationship with Circle Internet Group. Circle debuted on the New York Stock Exchange June 5 and has soared more than 500% since.

According to a revenue share agreement, Coinbase keeps 100% of the revenue generated on all USDC held on Coinbase, plus nearly 50% of all other USDC revenues, “which is 99% of Circle’s current revenue,” Ryan said.

USDC is the stablecoin issued by Circle. Stablecoins are a subset of cryptocurrencies pegged to the value of real-world assets. About 99% of all stablecoins are tethered to the price of the U.S. dollar.

Another way to play

“Yet, Coinbase doesn’t incur any of the operating costs borne by Circle,” Ryan said. “If the market is right on the current bullish view for Circle, Coinbase is another way to play that — and with the financial connection described, it would seem there’s a lot more value left in Coinbase.”

Coinbase, whose core business is crypto trading, has been expanding its suite of crypto services over the past several quarters to include areas like custody, staking, wallet services and stablecoins.

This month, the company beefed up its subscription plan by offering it with its first crypto-backed credit card in partnership with American Express. It also introduced a partnership with Shopify and debuted a stablecoin payments service for e-commerce. JPMorgan also partnered with the crypto company to launch its own version of a stablecoin, which it’s calling a “deposit token” on Coinbase’s in-house built blockchain, Base.

“There’s clearly a sentiment trade occurring in crypto as institutional investors are looking at the space, many for the first time, and want to express a positive view on crypto evolving from a speculative asset class to one of utility — with legislative clarity as the key catalyst — and Coinbase is the most direct way to invest in that thesis,” Ryan said.

Volume concern

If there’s one concern, it’s in trading volume, said Oppenheimer’s Lau. The average daily volume of crypto transactions on the Coinbase platform has been trending lower since April, which could be a risk for the company and other crypto trading providers heading into the second half of the year.

The analyst is optimistic the regulatory outlook can turn that around though, specifically if the industry gets market structure legislation on top of stablecoin legislation.

“If the GENIUS Act brought us to ‘stablecoin summer’ then I believe that the eventual passage of the CLARITY Act can bring us into altcoin summer,” Lau said. “So at the end of this year, I do see another catalyst that can reverse this trend because there will be animal spirits, people will be buying altcoins like crazy if we get past the market structure bill.”

Stablecoin issuer Circle resumed its rally on Thursday after a brief pullback this week.

Shares were last higher by 8%, after losing about 15% earlier over the past two days amid heightened post-IPO volatility and as investors weigh speculation around crypto regulation and the upcoming Fed rate decision.

With Circle still hot off its IPO, its investors may have rotated into Coinbase, which gained 15% in the same two days Circle fell. Coinbase, which began as a crypto exchange operator but has expanded its suite of crypto services, received a batch of price target increases this week from Wall Street including from Bernstein and Oppenheimer.

Coinbase is the main distribution platform for USDC, the popular stablecoin issued by Circle. It receives half of the revenue generated from the interest earned on Circle’s USDC reserves. It also makes 100% of the interest on any USDC held directly on its own platform.

As awareness of Circle’s story grows, investors are beginning to see how Coinbase could benefit from opportunites in the stablecoin space.

Shares of Circle have rocketed more than 600% since its initial public offering on June 5. Meanwhile, Coinbase is on pace for a 50% monthly gain, its best month since November and its first three-month rally since the end of 2023. Shares added more than 2% on Thursday.

Investors this week were watching Federal Reserve Chair Jerome Powell, who was on Capitol Hill for his semiannual testimony to Congress. Powell is facing increasing pressure both from President Donald Trump and multiple White House officials to lower interest rates, as well as two key Fed officials who have said they will likely favor a rate cut as soon as July – which could dampen Circle’s earnings. The company earns interest income on the reserves backing USDC, which are primarily held in cash at banks and short-term U.S. Treasury securities.

They’re also watching progress on the GENIUS (short for Guiding and Establishing National Innovation for U.S. Stablecoins) Act, which seeks to establish a regulatory framework for the use of stablecoins. The bill passed the Senate last week and now heads to the House of Representatives. The House has its own stablecoin legislation in the works, called the STABLE Act.

The Senate on Tuesday passed the GENIUS Act, a landmark bill that for the first time establishes federal guardrails for U.S. dollar-pegged stablecoins and creates a regulated pathway for private companies to issue digital dollars with the blessing of the federal government.

The bill passed with a 68-30 vote.

It’s a milestone day for the crypto industry, which put around $250 million into the 2024 cycle to elect what’s now considered to be the most pro-crypto Congress in U.S. history, and for President Donald Trump’s sprawling digital asset empire.

“The GENIUS Act will protect consumers, enable responsible innovation, and safeguard the dominance of the U.S. dollar,” said Sen. Kirsten Gillibrand, D-N.Y., one of the sponsors of the bill, in a statement.

The bill still faces hurdles in the Republican-held House, but passage in the Senate signals a turning point — not just for the technology, but for the political clout behind it.

The GENIUS Act, short for the Guiding and Establishing National Innovation for U.S. Stablecoins Act, sets guardrails for the industry, including full reserve backing, monthly audits, and anti-money laundering compliance.

It also opens the door to a broader range of issuers, including banks, fintechs, and major retailers looking to launch their own stablecoins or integrate them into existing payment systems.

The legislation grants sweeping authority to Treasury Secretary Scott Bessent, who last week told a Senate appropriations subcommittee in a hearing that the U.S. stablecoin market could grow nearly eightfold to over $2 trillion in the next few years.

The bill’s passage drew sharp criticism from Sen. Jeff Merkley, D-Ore., who accused Republicans of “rubberstamping Trump’s crypto corruption,” and allowing the president to sell “access to the government for personal profit.”

Merkley had pushed for an amendment to bar elected officials from personally profiting off digital assets, but said GOP lawmakers blocked all efforts to hold a floor vote.

In May, Senate Democrats unveiled the “End Crypto Corruption Act,” spearheaded by Merkley and Minority Leader Chuck Schumer of New York, meant to prohibit elected officials and senior executive branch personnel and their families from issuing or endorsing digital assets.

GENIUS now heads to the House, which has its own version of a stablecoin bill dubbed STABLE. Both prohibit yield-bearing consumer stablecoins — but diverge on who regulates what. 

The Senate’s version centralizes oversight with Treasury, while the House splits authority between the Federal Reserve, the Comptroller of the Currency, and others. Reconciling the two could take a while, according to congressional aides.

The GENIUS Act was supposed to be the easiest crypto bill to pass, but took months to reach the Senate floor, failed once, and passed only after fierce negotiations.

“We thought it would be easiest to start with stablecoins,” Sen. Cynthia Lummis, R-Wyo., said on stage in Las Vegas at this year’s Bitcoin 2025 conference, which focused heavily on stablecoins.

“It has been extremely difficult. I had no idea how hard this was going to be,” she said.

At the same event, Sen. Bill Hagerty, R-Tenn., echoed the frustration: “It has been murder to get them there,” he said of the 18 Senate Democrats who ultimately crossed the aisle.

Stablecoins are a subset of cryptocurrencies pegged to the value of real-world assets. About 99% of all stablecoins are tethered to the price of the U.S. dollar.

They offer instant settlement and lower transaction fees, cutting out the middlemen and directly threatening legacy payment rails.

Shopify has already rolled out USDC-powered payments through Coinbase and Stripe. Bank of America‘s CEO said last week at a Morgan Stanley conference that the bank is having conversations with the industry and individually exploring stablecoin issuance.

Deutsche Bank found that stablecoin transactions hit $28 trillion last year, surpassing that of Mastercard and Visa, combined.

Still, there are limits. The GENIUS Act restricts non-financial large tech companies from directly issuing stablecoins unless they establish or partner with regulated financial entities — a provision meant to blunt monopoly concerns.

JPMorgan Chase, meanwhile, is taking a different route, launching JPMD, a deposit token designed to function like a stablecoin but tightly integrated with the traditional banking system.

Issued on Coinbase’s Base blockchain, JPMD is only available to institutional clients and offers features like 24/7 settlement and interest payments — part of the broader push by legacy finance to adapt to the stablecoin era without ceding ground to crypto-native firms.

Forbes recently estimated Trump’s crypto holdings at nearly $1 billion, lifting his total net worth to $5.6 billion.

WATCH: President Trump’s crypto dinner

Circle, the company behind the USDC stablecoin, has filed for an initial public offering and plans to list on the New York Stock Exchange.

The prospectus, filed with the SEC on Tuesday, lays the groundwork for Circle’s long-anticipated entry into the public markets.

JPMorgan Chase and Citigroup are serving as lead underwriters, and the company is reportedly aiming for a valuation of up to $5 billion. It will trade under ticker symbol CRCL.

It marks Circle’s second attempt at going public. A prior merger with a special purpose acquisition company (SPAC) collapsed in late 2022 amid regulatory challenges. Since then, Circle has made strategic moves to position itself closer to the heart of global finance, including the announcement last year that it would relocate its headquarters from Boston to One World Trade Center in New York.

Circle reported $1.68 billion in revenue and reserve income in 2024, up from $1.45 billion in 2023 and $772 million in 2022. The company reported net income last year of about $156 million., down from $268 million a year earlier.

A successful IPO would make Circle one of the most prominent pure-play crypto companies to list on a U.S. exchange. Coinbase went public through a direct listing in 2021 and has a market cap of about $44 billion.

Circle will be trying to hit the public markets at a volatile moment for tech stocks, with the Nasdaq having just wrapped up its steepest quarterly drop since 2022. The tech IPO market has been mostly dry for over three years, though there are signs of life. Online lender Klarna, digital health company Hinge Health and ticketing marketplace StubHub have all filed their prospectuses recently. Late last week, artificial intelligence infrastructure provider CoreWeave held the biggest IPO for a U.S. venture-backed tech company since 2021. But the company scaled back the offering and the stock had a disappointing first two days of trading before rebounding on Tuesday.

Circle is best known as the issuer of USD Coin (USDC), the world’s second-largest stablecoin by market capitalization.

Pegged one-to-one to the U.S. dollar and backed by cash and short-term Treasury securities, USDC has roughly $60 billion in circulation and makes up about 26% of the total market cap for stablecoins, behind Tether’s 67% dominance. Its market cap has grown 36% this year, however, compared with Tether’s 5% growth.

The company’s push into public markets reflects a broader moment for the crypto industry, which is enjoying political favor under a more crypto-friendly U.S. administration. The stablecoin sector specifically has been ramping up as the industry gains confidence that the crypto market will get its first piece of U.S. legislation passed and implemented this year, focusing on stablecoins. President Donald Trump has said he hopes lawmakers will send stablecoin legislation to his desk before Congress’s August recess.

Stablecoins’ growth could have investment implications for crypto exchanges like Robinhood and Coinbase as they become a bigger part of crypto trading and cross-border transfers. Coinbase also has an agreement with Circle to share 50% of the revenue of its USDC stablecoin, and Coinbase CEO Brian Armstrong said on the company’s most recent earnings call that it has a “stretch goal to make USDC the number 1 stablecoin.” 

The stablecoin market has grown about 11% so far this year and about 47% in the past year, and has become a “systemically important” part of the crypto market, according to Bernstein. Historically, digital assets in this sector have been used for trading and as collateral in decentralized finance (DeFi), and crypto investors watch them closely for evidence of demand, liquidity and activity in the market.

WATCH: Circle CEO on launching first stablecoin in Japan

LONDON — The U.K. is likely to see stablecoin laws introduced in a matter of “months, not years,” according to crypto firm Circle’s top policy executive.

Dante Disparte, Circle’s global head of policy, said that he sees the U.K. will soon bring in legislation for stablecoins, a type of cryptocurrency that aims to maintain a constant peg to government currencies such as the U.S. dollar or British pound

“I think we’re within months, not years” of formal laws for the stablecoin market being introduced, Disparte told CNBC in an interview last week during a visit to London.

The Treasury and the Bank of England were not immediately available for comment when contacted by CNBC.

Disparte suggested the U.K.’s lengthier approach to introducing laws targeted at crypto may have been a good thing given events that transpired in 2022, such as the collapse of FTX, a crypto exchange once worth worth $32 billion, as well as other industry crises.

“You could also look back, and I think many in the U.K. and in other countries would argue that they’re vindicated in not having jumped in too quickly and fully regulating and bringing the environment onshore because of all the issues we’ve seen in crypto over the last few years,” Disparte said.

However, he added that more recently, there’s been a sense of urgency to introduce formal regulations for stablecoins, as well as trading in digital assets and other crypto-related activities.

By not bringing forth stablecoin-specific rules, the U.K. would risk missing out on the benefits of the technology. He added that the U.K. has some catching up to do with the European Union, which has begun enforcing regulation of stablecoins under its MiCa, or Markets in Crypto Assets, regulation. Singapore has also agreed formal laws for the stablecoin industry.

“In the spirit of protecting the U.K. economy from excess risk and crypto, there’s also a point in time in which you end up protecting the economy from job creation and the industries of the future,” Disparte said. He stressed that “you can’t have the economy of the future unless you have the money of the future.”

Among the benefits cited by Disparte are innovation in the wholesale banking industry, real-time payments, and the digitization of the British pound.

Officials at the Bank of England are currently exploring whether or not to introduce a digital version of the pound, which has previously been dubbed “Britcoin” by the media.

Dante said he had met with officials from the Bank of England recently and was reassured by their approach to so-called central bank digital currencies, or CBDCs.