Coinbase Global Inc. is urging U.S. banking regulators to clarify or amend their positions in order to allow banks to offer custody and trading execution services for cryptocurrencies as well as clear the path for them to partner with the likes of Coinbase.
In a letter seen by Bloomberg that was sent to the Office of the Comptroller of the Currency, the Federal Reserve Board of Governors and the Federal Deposit Insurance Corp., the largest U.S, crypto exchange urged the OCC to withdraw an interpretive letter that Coinbase said "imposes a de facto application process for novel bank activities" that effectively impedes banks from entering the digital-asset market. It also asked the Fed and the FDIC to confirm that state-chartered banks subject to their jurisdiction may both provide and outsource custody and execution services related to crypto.
A separate letter from three law firms retained by Coinbase argued that existing federal laws and regulations already authorize banks to provide cryptocurrency services and to engage with third-party service providers like Coinbase. Banking regulators need to confirm that's the case, Coinbase said. Representatives for the OCC and FDIC declined to comment, while a representative for the Fed did not return requests for comment.
"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," Faryar Shirzad, chief policy officer at Coinbase, said in an interview. Coinbase provides custody for most U.S. spot Bitcoin and Ether exchange-traded funds, which debuted last year.
Until recently, banks have been in a holding pattern when it comes to offering crypto services due to regulatory scrutiny. Between March of 2022 and May of 2023, for example, the FDIC
The push from Coinbase comes as barriers for banks to offer digital-asset services are falling quickly under President Donald Trump's new administration. Trump has appointed some crypto-friendly federal agency heads, and issued an executive order supportive of the digital-asset industry. Among other significant moves was the repeal of what's known as SAB 121, which was guidance from the Securities and Exchange Commission that made it impractical for banks to offer crypto custody by making them record all custodied assets on their balance sheets as liabilities.
Coinbase has long sought to bring attention to issues that made it difficult for some crypto companies to open or maintain bank accounts. The company's letter to regulators comes before the Senate Banking, Housing, and Urban Affairs Committee
"At Coinbase, we are very much of the view that we need a comprehensive ecosystem to support the crypto economy," Shirzad said. "That's why we've been so active on bank issues, even though they involved regulatory fixes that helped the banks. In our view, it's beneficial to have broad participation in the crypto economy."
The law firms writing the letter in support of Coinbase were Arnold & Porter Kaye Scholer, Cleary Gottlieb Steen & Hamilton and Wilmer Cutler Pickering Hale and Dorr.
The SEC sued Coinbase in June 2023 accusing the company of running an
"In particular the SEC, I think the acting chair and Hester Peirce, the other Republican commissioner, I think are very much focused on a process to heal the agency," Shirzad said. "The first order of business from what I understand from them is just create a much more responsive and transparent process where people can come in, have their say, get a fair hearing, and there be a process that ultimately leads to policy outcomes."
Separately, Coinbase
