Coinbase CLO: Bank Groups Opposing Trust Charter Bid Engaging in ‘Protectionism’

In brief

Top banking groups wrote letters to the Office of the Comptroller of the Currency to block Coinbase’s trust-charter bid.
Coinbase CLO Paul Grewal said the opposition shows that banks want crypto to remain unregulated.
Apart from Coinbase, Circle, Ripple, Paxos, and Bridge are the other firms pursuing federal charters.

The Office of the Comptroller of the Currency faces pressure from bank lobbyists as crypto exchange Coinbase demands a fair path into regulated finance.

Two of Washington’s most influential banking lobbies, the Independent Community Bankers of America (ICBA) and the Bank Policy Institute (BPI), have urged the Office of the Comptroller of the Currency to block Coinbase’s application for a national trust bank charter.

The groups filed separate comment letters to the OCC on Monday, warning that Coinbase’s application “raises systemic and legal concerns” and should be denied unless the company discloses more details about its business plan.

“Imagine opposing a regulated trust charter because you prefer crypto to stay … unregulated,” Coinbase Chief Legal Officer Paul Grewal tweeted in response. “That’s ICBA’s position… bank lobbyists trying to dig regulatory moats… protectionism isn’t consumer protection.”

The ICBA said in its letter that the public portion of Coinbase’s filing was “too vague to judge safety and legality,” faulting the company for relying on an OCC interpretive letter “issued without public notice,” which it said cannot legally justify non-fiduciary activities.

It also questioned whether Coinbase’s “flawed risk and control functions” and “non-independent governance structure” make the plan unsafe.

The BPI, which represents the country’s largest and foreign banks, said the approval “would exceed the OCC’s authority under federal law” unless Coinbase is “predominantly engaged in fiduciary activities.”

It also urged in its letter for the OCC to clarify whether Coinbase’s trust could manage or back stablecoins, warning that such arrangements might sidestep the GENIUS Act’s prohibition on yield-bearing stablecoins.

Coinbase filed for a national trust charter early last month to expand its Prime Vault and Prime Custody operations, services that would integrate custody with staking, financing, and trading offered by Coinbase affiliates.

Bank groups say that setup could create “inter-affiliate dependencies” and expose customers to “untested receivership risk” if the trust fails.

Jonathan Gould, head of the Office of the Comptroller of the Currency, recently told attendees at the American Bankers Association conference that stablecoins are “not an overnight deposit threat” and could help community banks compete with larger institutions if properly regulated.

A ‘structural shift’

“This is where two financial worlds collide,” Ruchir Gupta, co-founder of institutional marketplace Gyld Finance, told Decrypt.

“What banks really fear isn’t volatility—it’s competition,” he added. “ If Coinbase gets this charter, it effectively becomes a federally regulated financial institution, and others will follow. That’s a structural shift.”

Gupta added that banks’ criticism of confidentiality is “more tactical than substantive,” explaining that OCC charter applications “almost always contain confidential business details to protect competitive positioning.”

He called the dispute “a battle over precedent,” where banks “fear the normalization of crypto under federal banking law more than they fear Coinbase itself.”

Also in the queue

Crypto.com, Circle, Ripple, Bridge (Stripe’s stablecoin arm), and Paxos have also filed or announced national trust charter applications.

Erebor Bank received conditional OCC approval last month, following Anchorage Digital’s earlier charter, showing how crypto institutions are pushing into federally supervised territory.