SKN | Coinbase Faces Backlash from U.S. Bankers Over Trust Charter Bid

Key Points:

• The Independent Community Bankers of America (ICBA) urges regulators to reject Coinbase’s federal trust charter application, citing safety and soundness risks.

• The Bank Policy Institute (BPI) joins the push, warning of potential regulatory loopholes for crypto-linked firms.

• Coinbase defends its plan as a move toward greater oversight and national consistency in digital finance.

Bankers Push Back Against Coinbase’s Banking Ambitions

Coinbase’s bid to obtain a U.S. federal trust charter has sparked sharp resistance from traditional financial institutions. The Independent Community Bankers of America (ICBA), a leading advocacy group representing thousands of smaller U.S. banks, filed a letter to the Office of the Comptroller of the Currency (OCC) urging regulators to deny Coinbase’s application on grounds of risk management, profitability, and regulatory compliance.

The move underscores the widening rift between crypto innovators seeking mainstream financial legitimacy and the entrenched banking establishment that views them as both competitors and potential sources of systemic risk.

According to the ICBA’s letter, Coinbase “fails on multiple independent grounds, each of which is disqualifying under the OCC’s statutory chartering standards.” The organization argues that the crypto exchange’s proposed Coinbase National Trust Co. could struggle to maintain stability during market downturns and that its internal controls “remain demonstrably flawed.”

The OCC, which oversees national banks and trust institutions, has yet to issue a statement.

A Coordinated Effort from Wall Street and Community Banks

The ICBA’s action follows a parallel campaign from the Bank Policy Institute (BPI), a Wall Street advocacy group representing major banks such as JPMorgan Chase, Citi, and Bank of America. BPI filed its own objection earlier in the week, calling on the OCC to tighten standards for crypto companies seeking trust charters, specifically naming Coinbase, Ripple, Circle, and Paxos.

Both organizations argue that granting such charters would create uneven regulatory standards—allowing crypto-native firms to operate under federal oversight while traditional banks remain bound by stricter capital, liquidity, and consumer protection rules.

“This application fails to meet statutory chartering standards, presents compounding safety and soundness risks, and would set a dangerous precedent for the structure of the U.S. banking system,” wrote Brian Laverdure, ICBA’s senior vice president for digital assets and innovation policy.

The ICBA also urged the OCC to expand public access to Coinbase’s application materials and hold a public hearing—a rare move that could delay approval by months.

Coinbase Defends Move as Pro-Regulation

Coinbase’s leadership has pushed back against what it calls protectionist tactics from traditional bankers. Paul Grewal, the company’s chief legal officer, posted on X (formerly Twitter):

“Imagine opposing a regulated trust charter because you prefer crypto to stay unregulated. That’s ICBA’s position. They’re trying to dig regulatory moats to protect their own.”

Coinbase’s trust charter application, submitted in September, aims to streamline compliance by allowing the exchange to offer services such as payments, settlements, and custody under a single federal license—rather than navigating 50 separate state approvals. The exchange emphasized it does not intend to operate as a full-service bank, but rather as a specialized trust entity for digital assets.

The push comes as Coinbase continues to expand its institutional services, which accounted for nearly 35% of its total transaction volume in Q3, according to company filings.

Politics, Regulation, and Market Context

The OCC’s current head, Jonathan Gould, was confirmed earlier this year after serving as chief legal officer at blockchain firm Bitfury. His appointment by President Donald Trump, who has adopted a more crypto-friendly regulatory stance, has raised expectations that the OCC might be more receptive to such applications than in prior administrations.

Still, the regulatory mood in Washington remains divided. Lawmakers on both sides of the aisle continue to debate whether crypto firms should fall under existing banking laws or a separate, digital-native framework.

Crypto markets have shown muted reaction to the latest regulatory friction. Bitcoin (BTC) traded flat near $106,200, while Coinbase shares (COIN) dipped 1.8% in after-hours trading following the news.

The Broader Picture: Power, Perception, and Trust

At its core, the conflict between Coinbase and traditional banks represents more than a licensing dispute — it’s a struggle over the future architecture of finance. Banks fear the erosion of their gatekeeping role, while crypto firms seek equal footing under federal regulation to legitimize their operations.

For investors and policymakers, the outcome of Coinbase’s trust charter bid could set a precedent that defines how digital asset firms integrate — or compete — with the U.S. banking system.

If approved, the move could accelerate the convergence between crypto and traditional finance. If denied, it could reaffirm the regulatory moat that continues to separate the two worlds.