With the OCC approving Coinbase’s federal bank charter, the crypto exchange is now a national trust bank and is able to offer custody services for digital assets to institutions. This means more opportunities for Coinbase to play a role in traditional finance.
OCC Greenlights Coinbase National Trust Company
The Office of the Comptroller of the Currency (OCC) has granted Coinbase its highly sought-after federal bank charter. The new entity, Coinbase National Trust Company, is a national trust bank that can hold digital assets for others in a fiduciary capacity, according to the latest episode of Coin Bureau. Now that it has a federal bank charter, Coinbase can offer custody services to institutions with greater legal clarity and flexibility.
Navigating Regulatory Hurdles and Oversight
Obtaining the Coinbase federal bank charter was not easy. As the Coin Bureau host mentions, the SEC and FDIC have posed legal challenges and restrictions, thus limiting banks’ participation in the crypto world. Nevertheless, the OCC went ahead and approved the charter, which sets a precedent for other crypto companies seeking similar status. The federal bank charter means that Coinbase is able to offer custody services for digital assets and facilitate the movement of funds for institutions. The federal bank charter does not allow Coinbase to take deposits, offer lending, or provide FDIC insurance.
Now that Coinbase has a federal bank charter, the crypto exchange’s custody business is under direct federal supervision. With the federal bank charter, Coinbase may now be able to serve as a trustee of retirement accounts in accordance with US tax law.
Implications for Institutional Crypto Custody
Coinbase already has a substantial presence in the world of institutional custody. According to Coin Bureau, over 80% of spot Bitcoin ETF holdings in the US are in funds with Coinbase listed as their custodian. Coinbase has been licensed as a trust bank in New York since 2018. The federal bank charter further cements Coinbase’s role, giving institutional clients more confidence.
Unlike Circle and Ripple, whose trust banks are behind their stablecoins, Coinbase’s trust bank is built to custody assets that belong to its clients. Coinbase’s institutional custody business based in New York will be moved to the new federally chartered entity over the next three years. This means that the custody business will come under different regulatory oversight and expand its reach to more institutions.
Explore how institutional-grade custody services like those enabled by Coinbase’s federal bank charter can enhance your crypto trading experience with a funded account. crypto custody solutions.
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