Coinbase: OCC definitively validates Coinbase National Trust Company

Coinbase gets its federal pass. After returning to profit, Coinbase takes a new regulatory step. The exchange platform announced Monday, November 9, the final approval from the OCC, the federal regulator of American banks. This charter validates the creation of the Coinbase National Trust Company, dedicated to the conservation of digital assets.

The key points of this article:

The OCC validated the creation of the Coinbase National Trust Company on Friday, November 6.

The new entity places the custody of institutional assets under a single federal regulator, without deposits or credit.

Circle and Ripple have already achieved the same status this year, in July and October.

Senator Elizabeth Warren deems these licenses illegal and the community banks are suing the OCC.

What exactly is a trust company?

A trust company keeps its clients' assets; this works for both bitcoins and financial securities. It does not lend this money or collect deposits from the public.

For example, a pension fund can deposit its cryptocurrencies there, which the trust company keeps without lending them and without touching the credit.

Coinbase has been carrying out this activity since 2018 for institutional clients, via a subsidiary authorized by the financial regulator of the State of New York.

The new federal entity takes up this foundation by bringing together these activities under a single regulatory umbrella, that of the OCC.

On Friday, November 6, the OCC gave its final green light, according to Coinbase, which announced the news on Monday, November 9. This green light concludes a journey started with the submission of the file last year, followed by a conditional agreement in April, seven months earlier.

On X (Twitter), CEO Brian Armstrong wrote:

“A retention of trust is essential to bring more of the financial system onchain. »

Brian Armstrong, CEO of Coinbase

For him, this subsidiary is “one more step” towards this foundation, and Coinbase presents conservation as fundamental to its activity.

However, the scope remains narrow, since the company had excluded deposits from the general public and fractional reserves as early as April. The charter is aimed at institutional clients, far from retail banking.

A wave of amenities that disturbs

Coinbase joins an already strong field, where Circle, the issuer of USDC, obtained its final approval in July to manage the reserves of its stablecoin.

Ripple followed in October with the fiat company that houses its own stablecoin. Behind, the line lengthens with Block, Jack Dorsey's group, which filed an application in September to hold bitcoins.

Payward, Kraken's parent company, has been waiting since May. A company linked to World Liberty Financial received a conditional deal in August. This agreement would serve USD1, the stablecoin of the project supported by the Trump family, already in the sights of Congress.

The opposition does not disarm. Democratic Senator Elizabeth Warren considers these approvals, including that of Coinbase, illegal, reports Decrypt. Community banks have gone further. Their association, the Independent Community Bankers of America, sued the OCC.

It intends to prevent crypto companies from entering the bank through a “back door”.