Coinbase has announced that it has obtained initial approval for a national trust company charter from the U.S. Office of the Comptroller of the Currency, as reported by Bloomberg. This development marks a significant step towards the company's goal of operating as a federally regulated crypto custodian.
The approval is conditional, with Coinbase required to fulfill certain requirements before receiving a full charter. These conditions typically involve establishing compliance systems, appointing key personnel, and undergoing regulatory assessments. The OCC also expects companies to demonstrate their ability to manage risk, safeguard client assets, and adhere to anti-money laundering regulations.
Only after completing these steps can the agency grant full approval. According to Paul Grewal, Coinbase's chief legal officer, the company still needs to obtain final approval before it can operate under the OCC charter. This next phase will enable Coinbase to explore ways to expand its business in a manner that is exciting and crucial 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 it from accepting deposits or making loans. Coinbase initially applied for the charter in October, alongside companies such as Ripple.
More recently, EDX Markets, an exchange backed by Citadel, has also filed for a similar structure. The surge in applications highlights the growing demand for regulated custody as large investors enter the crypto market. For institutions, custody is more about trust than trading. A pension fund, for instance, may want to invest in bitcoin but requires a regulated entity to securely hold the asset.
A federal charter can provide this assurance in a way that state licenses may not. This move aligns with Coinbase's efforts to reduce its reliance on trading fees, which can fluctuate with market cycles.
Custody offers a more stable source of revenue. 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 ahead lies in payments, which is closely related to but separate from custody. He believes that Coinbase will be able to offer a wider range of products and services to its customers than ever before.