The Independent Community Bankers of America has come out against the Office of the Comptroller of the Currency‘s conditional approval of Coinbase‘s application for a national trust bank charter, arguing the application falls short of established regulatory standards. The ICBA contends that Coinbase’s filing shows weaknesses in risk controls, profitability projections, and resolution planning. The group further argues that the OCC does not have the statutory authority to extend trust powers for crypto-related activities without applying the full suite of banking regulations.
Central to the ICBA’s objection is the concern that nonbank entities are increasingly seeking the advantages of bank charters while avoiding the corresponding regulatory obligations. The organization warned that granting such approvals sets a precedent that could undermine the integrity of the broader financial system. The Americans for Financial Reform Education Fund echoed these concerns, stating that the decision departs from longstanding banking law and could expose the financial system to risks linked to crypto market volatility, fraud, and money laundering.
The OCC granted its conditional approval of Coinbase’s application on Thursday following six months of review. In response, Coinbase issued a statement explaining that the charter would bring its custody and market infrastructure operations under federal oversight. The company emphasized that it does not intend to hold customer deposits or engage in fractional reserve lending, and stated that the appropriate path for crypto is through the regulatory system rather than around it.
The dispute is part of a wider ongoing conflict between traditional banking organizations and crypto firms over the role of digital assets in the financial system, with particular tension around stablecoins and yield-bearing products. In January, Bank of America CEO Brian Moynihan cautioned that permitting stablecoin issuers to offer interest payments could pull as much as $6 trillion in deposits away from the banking system, which he argued would reduce lending capacity and drive up borrowing costs. The Bank Policy Institute has raised comparable concerns in correspondence with lawmakers, warning that regulatory gaps could allow yield-bearing stablecoin products to circumvent existing restrictions and disrupt traditional credit channels.
These debates are unfolding simultaneously in Washington, where Coinbase is actively participating in policy discussions surrounding the US Digital Asset Market Clarity Act, a proposed bill intended to establish a federal framework for crypto oversight. Coinbase CEO Brian Armstrong stated in January that the company could not support the legislation in its current form due to provisions restricting stablecoin rewards. However, Coinbase chief legal officer Paul Grewal indicated on Thursday that lawmakers are moving closer to agreement on the bill’s core elements, though the question of yield on stablecoins remains a significant point of contention.
Progress on the legislation has stalled in part because of this unresolved dispute, delaying a Senate Banking Committee markup session, which is a procedural requirement before the bill can advance to a full Senate vote. Until that step is completed, broader efforts to create a comprehensive federal framework for digital assets remain in limbo. The outcome of both the charter approval process and the legislative debate is expected to have lasting implications for how crypto companies interact with the traditional banking system.
Originally reported by CoinTelegraph.
