The country’s largest crypto exchange called on banking regulators to clarify or amend their rules to allow banks to offer crypto custody and trading execution services, Bloomberg reported Tuesday (Feb. 4).
A letter to the Office of the Comptroller of the Currency, the Federal Reserve Board of Governors and the Federal Deposit Insurance Corp. seen by Bloomberg asked the OCC to withdraw an interpretive letter that Coinbase said “imposes a de facto application process for novel bank activities,” per the report.
This essentially prevents banks from entering the digital asset space. The company also asked the Fed and FDIC to confirm that state-chartered banks subject to their jurisdiction can offer and outsource crypto custody and execution services, the report said.
“It’s important for regulators to make clear that banks can work with third-party providers in providing trading and exchange services to their customers,” said Coinbase Chief Policy Officer Faryar Shirzad, per the report.
The effort came amid a changing digital asset landscape in the United States following the arrival of a new pro-crypto administration in Washington. President Donald Trump named crypto-friendly figures to lead government agencies, and after taking office inked an executive order supporting the sector.
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Coinbase’s letter to regulators came one day before the Senate Banking, Housing and Urban Affairs Committee is set to have a hearing on “debanking.”
Debanking refers to the practice of banks closing or restricting access to accounts or refusing services to certain individuals, organizations or industries. This can happen for a range of reasons, including regulatory concerns, perceived risks, compliance issues or reputational considerations.
“At the heart of the issue is potentially the lack of a clear, comprehensive regulatory framework to address the unique risks posed by the FinTech and cryptocurrency industries,” PYMNTS wrote last year.
Also this week, Coinbase secured registration with the United Kingdom’s Financial Conduct Authority, a move that the company said makes it the largest registered crypto company in the U.K.
