U.S. Banks Join Forces to Oppose Coinbase's Trust License Application: High Risk of Liquidation

Coinbase’s Application for a National Trust License Faces Resistance from Banks; OCC Faces a Choice Between Innovation and Stability

(Background: The U.S. banking industry teams up to oppose the “Genius Act,” with stablecoins becoming a target for traditionalists.)
(Additional context: Bloomberg reports that Asia’s top three exchanges are resisting “crypto treasury” companies.)

The tug-of-war between Coinbase, the American cryptocurrency exchange, and the traditional banking sector has recently come to the forefront in Washington, D.C. Coinbase’s Chief Legal Officer, Paul Grewal, publicly accused banking lobbyists of building a “regulatory moat” to block Coinbase National Trust Company (CNTC)’s application to the Office of the Comptroller of the Currency (OCC) for a national trust license. While this license may seem like just a business permit, in the context of crypto industry efforts to legitimize themselves and Wall Street’s desire to maintain its protective barriers, it has become a critical battleground for reshaping the financial landscape.

Coinbase’s Push for a Federal License

In October 2025, Coinbase submitted an application to the OCC, aiming to use CNTC to provide digital asset custody, fiat currency custody, staking, lending, and trading services. The company hopes that obtaining a federal license will bridge the gap with institutional investors, reducing compliance costs caused by interstate regulatory differences. For Coinbase, placing trust services under a federal framework is akin to earning a “compliance passport” to directly compete with large custodial banks. It also offers reassurance to conservative retirement funds and insurance companies, enabling them to allocate digital assets with greater legal confidence.

In response to the banking industry’s collective opposition, Grewal took to X (formerly Twitter), asserting that:
“Bank lobbyists are building a regulatory moat to protect their interests. Their opposition seems more about keeping crypto unregulated than protecting consumers.”

According to OCC procedures, such applications typically undergo a review process lasting approximately 12 to 18 months.

Banking Industry’s Concerns: Risks and Market Defense

Leading the opposition is the Independent Community Bankers of America (ICBA), which formally submitted a letter to the OCC. The ICBA argued that CNTC’s risk management and control systems are “obviously flawed,” with governance lacking independent oversight. They warned that granting such a license could pose reputational risks for federal regulators.

The banking sector further pointed out that the highly volatile crypto market makes Coinbase’s profitability heavily dependent on trading volume. During a bear market, CNTC might struggle to maintain stable earnings, increasing potential liquidation costs. Additionally, the OCC’s current clearing framework has not been stress-tested for complex, non-insurance digital asset custody firms. If CNTC faces liquidity issues, crisis management mechanisms could be put to the test.

ICBA also emphasized that small community banks lack the technological capacity and capital to compete with Coinbase’s massive traffic. They warned that relaxing standards solely for innovation could lead to “unfair competition” at the community level.

OCC’s Dilemma: Balancing Innovation and Stability

Legal experts familiar with the process note that OCC’s review will scrutinize not just the application form but also AML (Anti-Money Laundering), KYC (Know Your Customer), and capital buffer calculations—approaching standards similar to those for traditional banks.

If approved, this would not only open the door for Coinbase’s institutional clients but also set a precedent for companies like Ripple and Circle, potentially encouraging more banks to enter the digital asset space and narrowing the gap between traditional and new finance.

Conversely, a rejection or indefinite delay could deepen the protective barriers for traditional banks, forcing crypto firms to seek regulation at the state or overseas level, further fragmenting the market.

While OCC has not yet indicated a clear stance, market watchers are paying close attention, especially as the Biden administration’s recent shifts in financial policy suggest a possible move toward “moderate openness combined with increased transparency.”

For investors, the license outcome will directly influence the pace of institutional adoption and could shape capital deployment strategies over the next decade.

Conclusion: The Power of a Single License

From an external perspective, Coinbase’s national trust license application appears to be a negotiation between a single company and regulators. However, in the broader context of the shifting power dynamics between crypto and traditional banking, this license has become a litmus test for whether the financial system can successfully integrate emerging technologies.

OCC’s decision will not only impact Coinbase but also serve as a signal for other crypto firms and global regulators. The next step will reveal whether innovation can gain official approval or if the traditional order will tighten its grip—an outcome that will soon become clear.

Related Reports:

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• Standard Chartered: $19 Billion in Crypto Market Clearing Is a Good Sign, Paving the Way for Bitcoin to Reach $200,000
• Standard Chartered: RWA Market to Reach $2 Trillion by 2028, Mostly Concentrated in Ethereum

(Originally published by BlockTempo, the most influential blockchain news media.)