Cost Photo | Future Publishing | Getty Images
coinbase The company announced Thursday that it has received conditional approval from the U.S. Office of the Comptroller of the Currency (OCC) to operate as a trust bank.
Paul Grewal, Coinbase’s chief legal officer, told CNBC that if finalized, crypto exchanges would be able to operate payment products in addition to custody operations under federal oversight.
“Longer term, I think we will be able to work with the OCC to look at offering not only custody products, but also other infrastructure products, particularly around payments, to grow and extend crypto payments in all sorts of new, interesting and important directions,” Grewal said.
The company said it would not be a commercial bank and would not accept retail deposits or engage in the fractional reserve banking practices used by larger banks, which hold only a portion of customers’ deposits as reserves and lend out the rest. Still, a trust charter would give them legal authority, access to banking infrastructure, and regulatory credibility to move, hold, and settle funds more efficiently, and perhaps allow them to compete with more companies. paypal or square.
The approval is a preliminary agreement that Coinbase’s application meets key regulatory requirements and is subject to certain conditions before it can actually operate as a trust bank.
Coinbase will be regulated directly by the OCC, one of the three major federal banking regulators, rather than state-based regulation, which is a major headache for companies in fast-moving industries like cryptocurrencies.
So far, that has been “the only way to solve this,” Grewal said, a nod to President Donald Trump’s promise to make the United States the “crypto capital of the world” during his second term. Prior to the Biden administration, it had a well-known anti-crypto stance, which the industry believes is hindering its growth and leadership on the world stage.
State-by-state regulations are a headache for many fast-paced startups operating in the highly regulated financial services sector. Instead of a single rulebook, companies are faced with 50 slightly different rulebooks that can not only slow growth but also increase costs.
“We would not have pursued this if we did not believe there were significant opportunities ahead for crypto infrastructure, including payments,” Grewal said. “The OCC’s conditional approval is an important recognition by the OCC that it wants products and services, especially those related to payments and storage, to be developed first and foremost here in the United States.”
Coinbase has established a payments strategy specifically centered around the creation of stablecoins. circle-issued USDC — A globally popular payment method. Last year, the company launched Coinbase Payments, a platform and merchant product that includes wallet integration and stablecoin checkout. We have also launched payment protocols such as: Shopify Built on an in-house blockchain base. Separately, we have partnered with Shopify and Stripe to enable our merchant partners to accept USDC stablecoins.
Coinbase CEO Brian Armstrong also said the company has a “stretch goal” to make USDC the world’s number one stablecoin, which is currently held by Tether’s USDT, and said the company aims to make Coinbase the “world’s number one financial services app” over the next few years. Armstrong has also become one of the most influential private sector voices on Capitol Hill on crypto policy, particularly in recent negotiations over the Clarity Act, a crypto market structure law.
