Coinbase Gets Conditional Approval From Banking Regulator—But Isn’t Launching a Bank

Coinbase signaled on Thursday that it plans to refine its services after receiving conditional approval for a national trust bank charter from the Office of the Comptroller of the Currency (OCC).

In a blog post, the San Francisco-based crypto exchange said that it is not becoming a commercial bank. Rather, the charter will provide the firm with “federal regulatory uniformity” when it comes to custodying various types of assets on behalf of customers, it said.

The development underscores how crypto-native companies are becoming increasingly tied to the traditional financial system. Coinbase said that the shift will enable the exchange to create new products that cater to both individuals and institutions.

Coinbase highlighted payments as an area that the charter will allow it to expand into. The company already has a deep relationship with stablecoin issuer Circle, which gained approval for a national trust banking charter alongside several competitors last year.

Coinbase Custody Trust Company obtained a limited purpose trust charter from the New York Department of Financial Services in 2018. That established the firm as a qualified custodian, allowing it to safeguard securities on behalf of professionals like investment advisors.

In the blog post, Coinbase said its work with the Department served as a cornerstone toward building operational maturity and institutional trust. The firm said that it will continue to operate under the regulator’s supervision and its stringent BitLicense framework.

Coinbase made clear that it doesn’t plan on accepting deposits from individuals like a traditional bank. What’s more, it doesn’t expect to engage in fractional reserve banking.

Operating under the oversight of a federal regulator, the OCC’s charter removes potential barriers to the exchange’s interstate expansion when it comes to the banking realm. Still, Coinbase’s exchange is already available across the U.S. in all 50 states.

When Circle received OCC approval last year, the Office’s Comptroller of the Currency, Jonathan V. Gould, declared that “new entrants into the federal banking sector are good for consumers, the banking industry and the economy.”

Editor’s note: This story is breaking and will be updated with additional details.