Coinbase Urges US to Lift Barriers for Crypto Bank Services

Coinbase Urges US to Lift Barriers for Crypto Bank Services

Coinbase Urges US Regulators to Clear Path for Banks Offering Crypto Services

Coinbase Global Inc. is pushing US banking regulators to clarify or revise their positions to enable banks to offer cryptocurrency custody and trading execution services. The company also seeks to make it easier for banks to form partnerships with crypto exchanges like Coinbase.

In a letter to the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board of Governors, and the Federal Deposit Insurance Corp. (FDIC), Coinbase called for the OCC to withdraw an interpretive letter it believes imposes unnecessary hurdles for banks wishing to enter the digital-asset market. The company also requested the Fed and FDIC confirm that state-chartered banks under their jurisdiction are permitted to offer and outsource crypto custody and execution services.

Additionally, three law firms retained by Coinbase argued that federal laws already allow banks to provide cryptocurrency services and engage with third-party providers like Coinbase. The company has urged regulators to formally confirm this interpretation.

Faryar Shirzad, Coinbase’s Chief Policy Officer, stated in an interview, “It’s important for regulators to make clear that banks can work with third-party providers in providing trading and exchange services to their customers.” Coinbase currently provides custody for most US spot Bitcoin and Ether exchange-traded funds that launched last year.

Banks have largely been hesitant to offer crypto-related services due to regulatory uncertainty. For example, between March 2022 and May 2023, the FDIC sent letters to certain banks under its supervision, instructing them to pause or limit crypto-related activities while providing additional information.

This push from Coinbase comes at a time when digital-asset services for banks are becoming more feasible under President Donald Trump’s administration, which has appointed crypto-friendly agency heads and issued an executive order supporting the industry. One of the administration's key moves was the repeal of SAB 121, SEC guidance that made it difficult for banks to offer crypto custody by requiring them to list all assets in custody as liabilities.