Industry super-heavyweight Coinbase has explored obtaining a federal banking charter, it has emerged, which would allow it to increase the range of services it offers to customers – this could even include offering bank accounts.
It has emerged that the company engaged in talks with the US Office of the Comptroller of the Currency (OCC) at the start of the year regarding their business model and compatibility with requirements for a banking charter.
The firm has not commented on the meeting but stated that they are, “committed to working closely with state and federal regulators to ensure we are properly licensed for the products and services we offer.”
If Coinbase were to obtain the license, it would increase their legal capacity to offer certain services to clients, including offering their own custody and payments services with an OCC limited-purpose charter. They would also be able to offer federally insured bank accounts to customers.
On the back end, under current rules, Coinbase must deal with state level regulators in the US, meaning that it must engage with a huge host of different bodies to offer its services. Obtaining a federal banking charter would allow them to streamline this process as they would only have to deal with one federal regulator.
With a broader range of services, as well as the confidence this move would generate, Coinbase would be able to target a wider pool of customers and bring cryptocurrency further into mainstream adoption.
However, at a banking association meeting in April, Joseph Otting of the OCC made it clear that many fintec firms seeking a federal banking charter do not complete the process:
“Most fintechs come to us because they have heard of this thing called a national banking charter that gives them pre-emption across state lines.
“When they come and they speak to us, and they understand what it really takes to be a bank, they kind of glaze over and often leave skid marks leaving the building.”
Even in the face of Otting’s dry humour, Coinbase nevertheless remains a hugely significant industry player and forms much of the ‘acceptable face’ of cryptocurrency to mainstream customers. Only a few days ago the firm was in the news as it announced the launch of its slick new suite of products, aimed at institutional investors.
If Coinbase were to obtain the charter it would doubtless be a positive move for the industry showing a true and serious partnership between cryptocurrency and traditional finance, which could bring huge numbers of new customers into the space.
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Alex has been putting words on paper since he was old enough to hold a pen; when he bought his first bitcoin in January 2017, those words discovered their place within crypto as well. He holds a master’s degree in international relations from Leiden University in the Netherlands, and his special expertise lies in European cryptocurrency regulation.