Key Takeaways
- Coinbase has asked the OCC to withdraw the 2020 letter, which it claims restricts the ability of banks to engage in crypto-related activities without undergoing lengthy regulatory hurdles.
- Coinbase is also seeking confirmation from the Federal Reserve and the FDIC that state-chartered banks under their jurisdiction are allowed to provide or outsource services such as crypto custody
Leading crypto exchange Coinbase is intensifying its lobbying efforts to U.S. regulators in a bid to facilitate greater involvement from banks in the crypto market. The exchange has formally called on banking authorities to clarify and amend rules that currently make it difficult for banks to partner with crypto firms.
Specifically, Coinbase has sent a letter to top regulatory bodies, including the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC), urging them to ease restrictions that prevent banks from offering crypto custody and trading execution services.
The exchange’s letter takes issue with an interpretive letter issued by the OCC in 2020, which Coinbase argues imposes an unofficial application process for novel banking activities related to crypto. According to the letter, this process creates significant obstacles for banks looking to expand into the digital asset space. Coinbase has asked the OCC to withdraw the 2020 letter, which it claims restricts the ability of banks to engage in cryptocurrency-related activities without undergoing lengthy regulatory hurdles.
Reportedly, Coinbase is also seeking confirmation from the Federal Reserve and the FDIC that state-chartered banks under their jurisdiction are allowed to provide or outsource services such as crypto custody and execution.
“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,” said Faryar Shirzad, Chief Policy Officer at Coinbase. Shirzad emphasized that regulatory clarity could open the door for greater participation from traditional banks in the crypto ecosystem, ultimately benefiting consumers.
The push for clearer regulatory guidance comes amid a changing regulatory environment in the U.S. Under President Donald Trump, there has been a shift toward more crypto-friendly appointments in key financial regulatory positions. These changes signal a more positive outlook for the cryptocurrency sector, including executive orders signed by Trump to encourage growth in digital assets.
Between March 2022 and May 2023, the FDIC reportedly sent letters to banks, urging them to halt or refrain from expanding their crypto-related activities. Banks were also asked to provide detailed explanations regarding their involvement with digital assets.
As part of its global expansion strategy, Coinbase recently registered with the United Kingdom’s Financial Conduct Authority (FCA), making it the largest registered crypto company in the U.K.
