Coinbase (COIN) announced on Thursday that it had received an initial nod from the U.S. Office of the Comptroller of the Currency (OCC), as reported by Bloomberg, to operate a national trust company charter. This step is pivotal in its journey toward becoming a federally regulated crypto custodian.
The approval, however, remains conditional and outlines specific requirements Coinbase must fulfill for full charter authorization. These include establishing compliance frameworks, recruiting essential staff, and undergoing regulatory evaluations. The OCC also anticipates firms to demonstrate their ability to manage risks, safeguard client assets, and adhere to anti-money laundering regulations. Full approval from the agency will only be granted upon completion of these prerequisites.
“We are awaiting final approval as our operations under an OCC charter can’t commence without it,” stated Paul Grewal, Coinbase’s chief legal officer, in conversation with CoinDesk. “This next phase allows us to delve deeper into how we might expand our business in ways that significantly contribute to the advancement of crypto.”
If finalized, this charter would enable Coinbase to operate a non-insured national trust company, allowing it to hold digital assets for clients while prohibiting deposit-taking and lending activities.
Coinbase submitted its application for the charter in October alongside other firms, including Ripple. Recently, EDX Markets, backed by Citadel, has also applied for a similar structure. This surge of applications indicates an increasing demand for regulated custody solutions as major investors venture into crypto markets.
For institutional clients, custody is less about trading and more about ensuring trust. For instance, a pension fund may seek exposure to bitcoin but requires a regulated entity to securely hold the asset. A federal charter can offer this level of assurance that state licenses might not provide.
Coinbase’s move aligns with its strategy to diversify revenue beyond fluctuating trading fees by focusing on more stable custody services. The company already serves as custodian for multiple U.S.-based spot bitcoin exchange-traded funds, safeguarding the assets for fund managers.
“Looking ahead, significant opportunities lie in payments—services that are related to but distinct from custody,” Grewal commented. “We foresee being able to offer an expanded array of products and services to our customers like never before.”
UPDATE (April 2, 16:57 UTC): Includes remarks from Coinbase’s chief legal officer Paul Grewal.