Cryptocurrency exchange Coinbase has submitted an application for a National Trust Company Charter to the US Office of the Comptroller of the Currency (OCC), joining a rising number of American crypto firms seeking the same licensing.
“Coinbase is making a notable advancement in enhancing our business capabilities and regulatory supervision beyond the current framework, facilitating innovation and growth in developing a modern financial system driven by digital assets,” Coinbase stated in a release on Friday.
Coinbase seeks the license to “bridge the gap” with traditional finance
According to Coinbase, the pursuit of this license is part of its plan “to bridge the gap between the crypto economy and the traditional financial system.” Nonetheless, the company has no intention of altering its core focus:
“Coinbase does not aim to transform into a bank. We firmly believe that having clear regulations and gaining the trust of our regulators and clients allows Coinbase to confidently innovate while ensuring the appropriate oversight and security.”
Luke Youngblood, a former Coinbase employee who spearheaded the creation of Coinbase staking rewards, explained in a podcast released on Friday that the license would allow Coinbase to “provide essentially built-in on-ramps and off-ramps, no longer relying on partner banks for these services.”
Coinbase indicated that obtaining the license would enable the exchange to diversify beyond custody services, paving the way for payment solutions and other related offerings under clearer regulatory guidelines.
However, political commentator Brendan Pedersen noted, “Trusts theoretically have more restrictions than other types of banks concerning business activities, but that distinction has blurred over time.”
Former Coinbase executive observes app improvements
Youngblood remarked that the Coinbase retail application has significantly improved since he left the exchange in 2022. “Back in 2022, before I departed, it wasn’t very user-friendly. Features like the Coinbase debit card weren’t functioning optimally,” Youngblood mentioned.
“You can genuinely see that they’ve recruited high-caliber engineering talent,” Youngblood added.
Related: AI agents require crypto to function in financial markets: Coinbase executive
This news follows several other crypto companies recently applying for the National Trust Charter.
On July 1, stablecoin issuer Circle applied to form a national trust bank in the US. A few days later, Ripple Labs also submitted a request for the same license.
Ripple Labs CEO Brad Garlinghouse stated that if the license is granted, it would create a “new (and unique!) benchmark for trust in the stablecoin market.”
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