Crypto exchange Coinbase’s latest acquisition of conditional approval from the Office of the Comptroller of the Currency (OCC) to establish a national trust bank is now facing backlash. US community banks are pushing back against the move, citing potential risks to consumers and the financial system.
US Banks Push Back Against Coinbase’s National Trust Bank Move
According to the latest reports, the US banks have raised their voices against Coinbase’s move to secure a national trust bank charter. They argue that the application falls short on risk controls, profitability, and regulatory compliance.
Recently, the Independent Community Bankers of America (ICBA) expressed strong concerns about Coinbase’s move. This opposition comes after the OCC granted conditional approval for Coinbase’s national trust bank charter.
According to ICBA, the crypto exchange’s application does not meet the standards set by US banking laws and the OCC’s own rules. The banks further noted that any crypto firm gaining banking capabilities without complying with strict regulations would pose a danger to their customers.
The concern is that crypto companies like Coinbase want the perks of being a US bank without following all the same rules and safeguards that regular banks have to follow. The statement read,
However, Coinbase stated that the exchange did not plan to become a traditional bank. The exchange aims to use the trust charter license to strengthen its custody services. It will not take customer deposits or lend money like regular banks. The license would give Coinbase stronger legal protection, easier access to banking services, and greater credibility. It would also make it simpler for the company to move, store, and handle money.
Financial Groups Raise Concerns
In addition to the banks, other organizations are also criticizing the OCC’s decision on Coinbase. The National Community Reinvestment Coalition (NCRC), a prominent banking organization, slammed OCC for approving Coinbase’s application to become a national trust bank.
NCRC’s Policy Director, Tara Flynn, said that granting Coinbase a bank charter would give the crypto company access to the federal banking system without the obligations that traditional banks have to the public. “Coinbase does not meet the requirements for a national trust bank charter and the OCC should have denied its application,“ stated Flynn, adding,
This comes amid Coinbase’s opposition to the SEC’s rules for tokenized securities. The proposal requires third parties to get issuer approval before creating blockchain versions of publicly traded securities. The company argues that such restrictions would violate long-standing securities laws, block innovation, and go against decades of SEC precedent protecting secondary market trading.
Other financial watchdogs, like the Americans for Financial Reform Education Fund, have also criticized the move. They pointed out that it could expose the system to crypto-related volatility, fraud, and money laundering.
Source: https://coingape.com/us-banks-push-back-against-coinbase-national-trust-bank-move/
