Coinbase’s plan to launch a national trust company in the United States has drawn fresh opposition from community banks and consumer groups.
The pushback came soon after the Office of the Comptroller of the Currency gave conditional approval to the company’s application. The dispute has added to a wider fight over how crypto firms should enter the US financial system.
The Independent Community Bankers of America said the approval gives a crypto company access to the benefits of a federal charter without requiring the full set of bank rules.
The group argued that Coinbase’s application does not meet key standards in areas such as risk controls, profitability, and resolution planning. It also mentioned that the OCC may not have the legal authority to expand trust powers for crypto-related services in this way.
Community banks challenge OCC decision
The Independent Community Bankers of America announced Coinbase’s trust charter should not move forward under the current terms.
In a statement released on Thursday, the group said the application falls short of normal regulatory standards. It warned that the approval could create risks for consumers and the wider financial system.
Additionally, the banking group also argued that the OCC should not allow nonbank firms to gain federal trust powers without meeting the same rules that apply to banks.
”The sudden influx of applications demonstrates nonbank entities are seeking the benefits of a US bank charter without satisfying the full scope of US bank regulations,” the group noted.
That claim reflects a broader concern among smaller banks that crypto firms want access to federal status without taking on the same duties.
Americans for Financial Reform Education Fund also criticized the OCC’s decision. The group said the approval departs from long-standing banking law and could expose the system to risks tied to crypto market swings, fraud, and money laundering. Its comments added to the growing list of voices questioning the regulator’s approach.
The objections came after six months of OCC review. The regulator gave Coinbase conditional approval on Thursday to establish Coinbase National Trust Company.
That decision does not allow the firm to begin operations right away, but it creates a path for final approval if the company meets the remaining conditions.
Coinbase says charter covers custody, not banking
Coinbase said the charter is meant for custody and market infrastructure services, not retail banking. The company stated that it does not plan to take customer deposits or use fractional reserve lending.
It described the move as part of an effort to bring its custody business under a federal framework. Moreover, the charter would support the business it has already built in digital asset safekeeping and related infrastructure.
The exchange added that a federal trust charter could give large clients more confidence in its services. It said the model would let it operate under one national framework instead of dealing with separate rules across many states.
Coinbase also said its current New York setup would remain in place, including its BitLicense and state trust charter.
Conditional approval still leaves hurdles ahead
The company must meet the OCC’s remaining requirements before it can launch the trust company. Those steps include building strong anti-money laundering and know-your-customer programs, setting up proper management systems, and showing that its risk controls are ready for federal oversight.
The OCC uses conditional approval to give applicants time to complete those steps before they begin operating.
In Coinbase’s case, the process means the firm has not yet cleared every regulatory check. Final approval will depend on whether the regulator decides the company’s systems and controls are ready.
That point matters because much of the current criticism is tied to whether crypto firms can meet the same standards expected in traditional finance. Community banks say the OCC should not lower that bar.
Coinbase, on the other hand, says the charter offers a clear and lawful route for digital asset custody inside the existing regulatory structure.
The fight over standards may continue well beyond Coinbase’s application. Other crypto firms have followed a similar path in recent months. Paxos received conditional approval in December, while Bridge, Stripe’s stablecoin unit, secured similar approval in February.
Wider policy fight keeps pressure on charter bids
The opposition to Coinbase’s charter is part of a larger fight between banking groups and crypto companies in Washington. Much of that debate centers on how digital asset firms should be regulated and whether products such as stablecoins could pull funds away from the banking sector.
Bank of America chief executive Brian Moynihan said in January that interest-bearing stablecoins could move as much as $6 trillion out of bank deposits.
Industry groups such as the Bank Policy Institute have raised similar concerns in letters to lawmakers. They have warned that regulatory gaps could let crypto firms offer products that look like bank services without following the same rules.
Those concerns have also appeared in talks around the US Digital Asset Market Clarity Act, where stablecoin rewards remain a major point of disagreement.
Furthermore, that wider policy debate has slowed progress on crypto legislation in the Senate Banking Committee. At the same time, more firms are still seeking OCC trust charters.
Fidelity Digital Assets, BitGo, Crypto.com, Circle, Ripple, and EDX Markets have all taken steps in that direction, though each firm must still meet final conditions before it can operate under a national trust structure.