U.S. Community Banks Push Back on OCC's Conditional Approval of Coinbase Trust Charter

U.S. community banks are mounting a challenge to Coinbase's newly approved national trust bank charter, warning the decision could hand crypto firms banking-style privileges without the full set of safeguards imposed on traditional institutions. The Office of the Comptroller of the Currency granted Coinbase conditional approval for a national trust bank charter on Thursday. Banking groups say the move raises consumer-protection and systemic-risk questions, arguing that oversight standards and risk-management expectations should not be diluted as crypto companies seek access to bank-like benefits. The Independent Community Bankers of America said Coinbase's application fails to meet key regulatory requirements, pointing to shortcomings in risk controls, profitability and resolution planning. The group also contended the OCC lacks authority to extend trust powers connected to crypto activity without tighter supervision. ICBA said nonbank firms are increasingly pursuing banking advantages while avoiding comparable compliance burdens, potentially exposing customers to greater risk. Coinbase countered that it is not aiming to operate as a traditional bank. The company said the charter is intended to support its custody business, not lending or deposit-taking, and would place its activities under federal oversight. Criticism has extended beyond community banks. The National Community Reinvestment Coalition questioned whether the approval serves the public interest, with policy director Tara Flynn saying Coinbase does not satisfy the requirements for a national trust bank charter. Americans for Financial Reform Education Fund also cited concerns tied to crypto-market volatility, fraud and money-laundering risks, arguing the decision could weaken existing financial safeguards. Coinbase said it would not engage in fractional-reserve lending and framed the charter as part of bringing crypto further into the regulated financial system. The dispute is unfolding as lawmakers debate the Digital Asset Market Clarity Act, with stablecoin yield provisions still a major sticking point. Banking groups warn that yield-bearing stablecoins could draw deposits away from traditional banks. Bank of America CEO Brian Moynihan has previously said such products could siphon trillions from the banking system. Coinbase executives have signaled progress in legislative discussions, though core issues remain unresolved. The Senate Banking Committee has delayed the bill's markup, leaving the broader U.S. digital-asset regulatory framework unsettled.