Paul Johnson Coinbase is chasing a National Trust Company Charter from the OCC — but insists it’s not becoming a bank. Here’s why this move could reshape crypto’s bridge with TradFi.
Coinbase Pushes for a National Trust Charter — With a Twist
Coinbase, the largest publicly traded crypto exchange in the United States, has officially applied for a National Trust Company Charter from the Office of the Comptroller of the Currency (OCC). While this might sound like the first step toward Coinbase turning into a bank, the company is making one point clear: don’t call it that.
The move underscores a broader strategy. Coinbase isn’t seeking to replicate traditional banking — instead, it’s positioning itself to expand services, reduce reliance on partner banks, and bring crypto and TradFi closer together under a framework with clearer regulatory oversight.
Not a Bank, But a Bridge to TradFi
In its statement, Coinbase emphasized that this charter would serve as a regulatory bridge, not a reinvention of its business model.
“Coinbase has no intention of becoming a bank,” the company stressed, underscoring that innovation in digital assets thrives best when rules are transparent and trust with regulators is maintained “.
Essentially, the trust charter could give Coinbase more autonomy in handling custody, payments, and customer fund management, without requiring third-party banking intermediaries. For users, that could mean smoother on- and off-ramps between fiat and crypto — one of the biggest pain points in the industry today.
Former Insider Weighs In on Coinbase’s Evolution
Luke Youngblood, once a key figure at Coinbase who developed its staking rewards system, shared insights on the development. Speaking on a recent podcast, he explained how the trust license could eliminate the need for external banking partnerships by embedding direct payment and custody functions into Coinbase’s infrastructure.
Youngblood also praised the progress Coinbase has made since his departure in 2022. At the time, features like the Coinbase debit card lagged in usability. Fast forward to today, and he sees a retail app that has significantly leveled up — thanks, he says, to “top-tier engineering talent.”
Regulatory Nuances: Trust Charter vs. Bank License
One wrinkle in this story is that a National Trust Charter doesn’t fully equate to being a bank — at least in the traditional sense.
As financial analyst Brendan Pedersen pointed out, trusts historically face more restrictions on business activities than commercial banks. However, the regulatory lines have blurred in recent years, making the distinction less clear-cut.
For Coinbase, this means walking a fine line: gaining regulatory clarity and expanded services while avoiding the baggage that comes with being labeled a bank.
Coinbase Isn’t Alone in This Play
Coinbase is not the only crypto heavyweight exploring this regulatory pathway. Just this past July:
Circle, the issuer of the USDC stablecoin, filed an application to set up a national trust bank.
Ripple Labs followed closely with its own application, with CEO Brad Garlinghouse calling the move “a new and unique opportunity” to expand its services under federal oversight.
This surge of applications suggests that crypto companies see trust charters as a safer, more flexible route to align with US regulators while avoiding the red tape and stricter requirements of a full banking license.
Why This Move Matters for Crypto
For Coinbase, a National Trust Charter represents more than a regulatory milestone. It’s a strategic step toward:
Reducing dependence on external banks for fiat on-ramps and off-ramps.
Expanding financial products under a more direct regulatory umbrella.
Building stronger credibility with policymakers, investors, and customers.
At the same time, Coinbase’s insistence on not being called a bank signals a careful balancing act. The company wants to project innovation and regulatory trustworthiness, without diluting its identity as a crypto-native platform.
The Bigger Picture
Coinbase’s trust charter bid lands at a time when regulators are tightening their grip on crypto operations in the US. The OCC’s decision will not only shape Coinbase’s future, but also set a precedent for how other digital asset firms structure their businesses in the years ahead.
Whether approved or not, this move signals the industry’s growing shift from shadow banking relationships to transparent, regulated frameworks. And in a market where trust is just as valuable as innovation, that shift could be the real game-changer.
Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards.
