U.S. community banks have pushed back after the Office of the Comptroller of the Currency conditionally approved Coinbase’s national trust bank charter on Thursday. The criticism centers on consumer protection and systemic risk. Opponents argue the decision could let a crypto firm obtain banking-related privileges without meeting the full set of regulatory standards applied to traditional institutions.
ICBA says Coinbase application misses core supervisory requirements
The Independent Community Bankers of America said Coinbase’s filing falls short in several key areas. It pointed to weaknesses in risk controls, profitability, and resolution planning. The group also argued that the OCC does not have authority to extend trust powers tied to crypto activity without tighter oversight.
Its objection goes beyond a single application. ICBA said nonbank firms are increasingly seeking the benefits of banking status without following the same rules, and warned that approvals of this kind could expose customers to higher risks. That argument places the Coinbase case inside a wider fight over how crypto businesses should be supervised in the U.S.
Coinbase says the charter is for custody, not traditional banking
Coinbase responded by saying it does not plan to operate as a traditional bank. The company said the charter would support its custody business rather than lending or deposit-taking. It also said the license would bring those operations under federal supervision.
The company separately stated that it would not engage in fractional reserve lending. In Coinbase’s framing, the move fits with bringing crypto activity into a regulated financial system. Its public position is narrow: the charter is presented as a custody structure, not a shift into full-service banking.
Other groups raise public-interest and financial safety objections
Criticism has also come from outside the community banking sector. The National Community Reinvestment Coalition challenged the OCC decision on public-interest grounds. Policy Director Tara Flynn said Coinbase does not meet the requirements for a national trust bank charter.
Americans for Financial Reform Education Fund focused on exposure to crypto volatility, fraud, and money laundering. Those groups said approvals of this type could weaken existing financial safeguards. The dispute is not limited to licensing language. It reflects a broader question over what standards crypto firms must satisfy before gaining access to the U.S. banking framework.
Fight over the charter overlaps with CLARITY Act debate
The clash comes while lawmakers are still debating the Digital Asset Market Clarity Act. One unresolved issue is stablecoin yield. Banking groups argue that yield-bearing stablecoins could move deposits out of traditional banks.
Bank of America CEO Brian Moynihan had previously warned that such products could pull trillions of dollars from the banking system. At the same time, Coinbase executives said legislative talks have made progress, though major issues remain unsettled. The Senate Banking Committee has since delayed markup of the bill, leaving the broader digital-asset regulatory framework unresolved.