In a significant development, Coinbase announced on Thursday that it has obtained preliminary approval for a national trust company charter from the U.S. Office of the Comptroller of the Currency, as reported by Bloomberg. This conditional approval marks a crucial step towards Coinbase operating as a federally regulated crypto custodian.
However, the approval is not yet final and is contingent upon Coinbase meeting specific requirements, including the development of compliance systems, the appointment of key personnel, and the completion of regulatory reviews. The OCC expects firms to demonstrate their ability to manage risk, protect client assets, and adhere to anti-money laundering rules before granting full approval. Coinbase's Chief Legal Officer, Paul Grewal, emphasized that the company still requires final approval and will not operate under an OCC charter until all conditions are met. The next phase will enable Coinbase to explore ways to expand its business in exciting and important ways for the development of crypto.
If the charter is finalized, Coinbase will be permitted to operate a non-insured national trust company, allowing it to hold digital assets on behalf of clients while prohibiting the acceptance of deposits or the issuance of loans. Coinbase initially applied for the charter in October, alongside other firms such as Ripple, and more recently, Citadel-backed exchange EDX Markets has also filed for a similar structure. This surge in applications highlights the growing demand for regulated custody as large investors enter the crypto market. For institutional investors, custody is less about trading and more about trust, and a federal charter can provide the necessary assurance for secure asset holding.
This development aligns with Coinbase's efforts to reduce its reliance on trading fees, which can be volatile, and instead focus on custody, which offers more stable revenue streams. The company already acts as a custodian for several U.S. spot bitcoin exchange-traded funds, holding the underlying assets on behalf of fund managers. According to Grewal, the significant opportunity lies in payments and custody-adjacent services, which will enable Coinbase to offer a broader range of products and services to its customers.