The cryptocurrency exchange Coinbase has applied for a national trust company charter from the Office of the Comptroller of the Currency (OCC), joining an increasing number of U.S. crypto companies seeking the license.
Coinbase stated in a press release on Friday: “Coinbase has taken an important step in expanding its business capabilities and regulatory oversight, paving the way for innovation and growth in building a modern financial system driven by digital assets.”
Coinbase claims that applying for the charter is part of its strategy to “bridge the gap between the crypto economy and the traditional financial system.” However, it does not intend to change its core business direction:
“Coinbase does not intend to become a bank. We firmly believe that clear rules and the trust of regulators and customers enable Coinbase to innovate confidently while ensuring appropriate oversight and security.”
Former Coinbase employee Luke Youngblood explained in a podcast released on Friday that the charter would allow Coinbase to “provide built-in funding in and out channels, no longer needing to rely on partner banks for these channels.”
Coinbase stated that if the charter is approved, the exchange will be able to expand its business scope, no longer limited to custody services, but also conduct payment and other related services under clearer regulatory guidance.
However, political commentator Brendan Pedersen added: “In theory, trusts have more restrictions on commercial activities than other types of banks, but this boundary has gradually blurred over the years.”
Youngblood noted that since he left Coinbase in 2022, the Coinbase retail app has significantly improved. Youngblood said, “When I was working in 2022, the app was not very user-friendly, for example, the Coinbase debit card feature was not well developed.”
He added, “You can clearly feel that they have hired some top engineering talent.”
In recent years, other crypto companies have also applied for national trust company charters.
On July 1, stablecoin issuer Circle applied to establish a national trust bank in the U.S. A few days later, Ripple Labs also submitted an application for the same charter.
Ripple Labs CEO Brad Garlinghouse stated that if the charter is approved, it would become a “new (and unique!) trust benchmark” for the stablecoin market.
Related: Gemini executive: The Bitcoin cycle is “very likely” to continue in some form
Original: “Coinbase applies for national trust charter, but still not a bank”
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