Banking Groups Challenge Coinbase’s Path to Federal Trust Charter

The Independent Community Bankers of America has filed a formal objection to Coinbase’s application for a National Trust Company Charter, marking the latest friction between traditional banks and crypto companies pushing into regulated financial services. In a November 3 letter to the Office of the Comptroller of the Currency, the trade group raised concerns about what it called “untested” elements of the exchange’s custody operations. It warned that Coinbase’s trust arm could face serious profit challenges when crypto prices decline.

Crypto Exchange Faces Industry Pushback

The banking association wants regulators to either reject the application or extend the review window to allow more time for public feedback. Community banks are nervous about competition from large crypto platforms, particularly as more digital asset firms seek ways to operate alongside traditional financial institutions. The regulatory uncertainty hasn’t slowed investor interest in newer projects, though, as many traders continue to track opportunities through something like a crypto presale list or other resources that can inform them of new coins on the market. At the same time, established companies wait for federal approval. The contrast shows how different parts of the crypto market are moving at different speeds.

Coinbase filed its charter request in October, calling it part of a broader effort to connect digital assets with mainstream finance. The exchange already operates Coinbase Custody Trust Company in New York under state oversight. Still, a federal charter would let it offer custody and fiduciary services nationwide without needing approval from each state. The OCC typically takes 12 to 18 months to review these applications, meaning Coinbase could wait well into 2026 for a final decision.

Legal Chief Fires Back at Banking Lobby

Coinbase’s chief legal officer, Paul Grewal, responded to the banking lobby with some pointed words after reading their letter.  “Imagine opposing a regulated trust charter because you prefer crypto to stay… unregulated,” he said on X. He further stated that the banking lobby is creating “regulatory moats” around itself so it is protected from future competition, and that it is not actually focused on protecting consumers or maintaining financial stability.

Grewal’s comments reflect a broader battle over how regulatory bodies will integrate digital asset companies into the U.S. banking system. A national trust charter allows a firm to perform only custodial services and act as a fiduciary, but does not permit it to accept deposits or extend loans. The value of having a national trust charter is the ability to attract large institutional clients, and also the availability of federal oversight, which can increase the credibility of a company operating in the custody space.

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Stablecoin Rules Add New Pressure

While Coinbase battles over its trust application, other crypto firms face their own regulatory hurdles. The American Bankers Association and 52 state groups sent a separate letter to the Treasury Department on November 4, asking officials to crack down on what they see as workarounds to the GENIUS Act’s ban on stablecoin interest payments. Banks worry that platforms offering rewards through affiliates could drain deposits and cut into lending capacity.

Ripple and Circle have both applied for federal charters following the passage of the stablecoin legislation. Ripple launched its dollar-backed token, RLUSD, while Circle continues to grow USDC, which has a market cap of around $30 billion. The OCC was supposed to finish reviewing Ripple’s application in late October, but hasn’t announced a decision yet. Anchorage Digital remains the only crypto company with an approved national trust charter, granted back in January 2021.