In a significant development, Coinbase announced on Thursday that it has been granted preliminary approval for a national trust company charter by the U.S. Office of the Comptroller of the Currency, as reported by Bloomberg. This conditional approval marks a crucial step towards Coinbase's goal of operating as a federally regulated crypto custodian. However, the approval is not yet final and is contingent upon Coinbase meeting specific requirements, including the implementation of robust compliance systems, the appointment of key personnel, and the completion of regulatory reviews.
The OCC also expects the company to demonstrate its ability to manage risk, safeguard client assets, and adhere to anti-money laundering regulations. Once these conditions are met, the agency will conduct a final review before granting full approval. According to Paul Grewal, Coinbase's chief legal officer, the company still requires final approval before it can operate under the OCC charter.
Grewal stated, "This next phase allows us to delve into more detail on how we can expand our business in ways that are exciting and important for the development of crypto." If the charter is finalized, Coinbase will be permitted to operate a non-insured national trust company, enabling 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 other firms such as Ripple.
More recently, EDX Markets, an exchange backed by Citadel, has also filed for a similar structure, indicating a growing demand for regulated custody services among large investors entering the crypto market. For institutional investors, custody is less about trading and more about trust.
A pension fund, for example, may seek exposure to 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 development aligns with Coinbase's efforts to reduce its reliance on trading fees, which can be volatile due to market fluctuations. Custody services, on the other hand, offer a more stable source of revenue.
Coinbase already acts as a custodian for several U.S. spot bitcoin exchange-traded funds, holding the underlying assets on behalf of fund managers.
Grewal noted, "The big opportunity going forward would be payments... custody-adjacent but separate. We think we'll be able to offer a much wider range of products and services to our customers than ever before."