Cryptocurrency exchange Coinbase has submitted an application for a National Trust Company Charter with the Office of the Comptroller of the Currency (OCC), aligning itself with a rising number of US-based cryptocurrency firms seeking the same license.
“Coinbase is making a pivotal move to enhance our business capabilities and regulatory oversight beyond the current framework, facilitating innovation and growth in the development of a modern financial system driven by digital assets,” Coinbase stated in a press release on Friday.
Coinbase aims for the license to “bridge the gap” with TradFi
As per Coinbase, seeking this license is part of its strategy “to bridge the gap between the crypto economy and traditional financial systems.” However, it maintains that it has no desire to alter the fundamental focus of its business:
“Coinbase has no intention of becoming a bank. We firmly believe that clear regulations and the trust of our regulators and customers empower Coinbase to innovate confidently while ensuring adequate oversight and security.”
Luke Youngblood, a former Coinbase employee who oversaw the development of Coinbase staking rewards, noted in a podcast released on Friday that the license would allow Coinbase to “provide essentially built-in on-ramps and off-ramps, eliminating the need to rely on partner banks for these services.”
Coinbase indicated that obtaining this license would allow the exchange to diversify beyond custody services, opening avenues for payments and other related offerings under more defined regulatory frameworks.
However, commentator Brendan Pedersen remarked, “Trusts generally face more restrictions compared to other bank types regarding business activities, but the lines have blurred over time.”
Former Coinbase executive highlights app enhancements
Youngblood remarked that the Coinbase retail application has shown significant improvements since his departure from the exchange in 2022. “When I worked there in 2022, before I left, it was not that great. Features like the Coinbase debit card didn’t function very well,” Youngblood shared.
“You can really see that they’ve brought on some exceptional engineering talent,” Youngblood stated.
Related: AI agents require cryptocurrency to operate in financial markets: Coinbase executive
This development coincides with several other cryptocurrency firms that have recently sought the National Trust Charter.
On July 1, stablecoin issuer Circle requested to form a national trust bank in the United States. Shortly thereafter, Ripple Labs also applied for the same license.
Ripple Labs CEO Brad Garlinghouse mentioned that if the license is granted, it would set a “new (and unique!) standard for trust in the stablecoin market.”
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