U.S. regulators urged to free banks to provide crypto services
Coinbase banking initiative
Coinbase Global Inc. has called on US banking regulators to revise their stance to allow banks to offer custody and trading services for cryptocurrencies, as well as to collaborate with companies in the Bitcoin industry.
According to Bloomberg, in a letter addressed to the Office of the Comptroller of the Currency (OCC), the Federal Reserve (Fed), and the Federal Deposit Insurance Corporation (FDIC), the largest US crypto exchange demanded the repeal of regulations that prevent banks from entering the digital asset market.
Additionally, Coinbase urged the Fed and FDIC to confirm that state-licensed banks under their jurisdiction have the right to provide and outsource custody and execution services for cryptocurrency transactions.
A separate letter, prepared by three law firms retained by Coinbase, argued that existing federal laws already authorize banks to offer cryptocurrency services and partner with crypto-related service providers. The company insists that regulators should officially confirm this position. Representatives from the OCC and FDIC declined to comment, while the Fed did not respond to requests for comment.
“It is important for regulators to make it clear that banks can work with third-party providers to offer trading and exchange services to their customers,” said Faryar Shirzad, Coinbase’s Chief Policy Officer. He also reminded that Coinbase holds the majority of assets backing US spot Bitcoin and Ethereum ETFs, which launched last year.
How banks engage with cryptocurrencies
Until recently, banks avoided working with cryptocurrencies due to regulatory restrictions. For example, between March 2022 and May 2023, the FDIC issued directives to several financial institutions, instructing them to halt or limit crypto-related activities and provide additional documentation.
However, President Donald Trump’s new administration is actively removing barriers for banks seeking to offer digital asset services. Notably, Trump appointed crypto-friendly leaders to several federal agencies and signed an executive order supporting the digital asset industry. Among the key changes was the repeal of an SEC regulation, which previously required banks to record all custodied crypto assets as liabilities on their balance sheets, making crypto custody services impractical for banks.
Coinbase has long advocated for resolving banking challenges faced by crypto companies, particularly in opening and maintaining bank accounts. The exchange’s appeal to regulators comes ahead of a Senate Banking Committee hearing on what is known as "debanking"—the practice of restricting banking services for crypto companies.
“At Coinbase, we strongly believe that a well-developed infrastructure is essential for the crypto economy,” Shirzad stated. “That’s why we are actively working on banking issues. The broader the participation in the crypto economy, the better.”
Meanwhile, Coinbase users continue to suffer major losses due to ongoing security vulnerabilities in the system.
