Coinbase urges US banking regulators to allow banks to offer cryptocurrency services including trading and custody.
The Crypto Exchange argued that current rules create unnecessary obstacles that prevent banks from entering the digital asset market, according to which Bloomberg,
In a letter to the office of the Comptroller of Mudra, Federal Reserve, and Federal Deposit Insurance Corporation, the coinbase called for changes that would make it easier for banks to partner with crypto firms.
American banks require additional approval to engage with crypto
In particular, the coinbase asks the OCC to withdraw a policy that it says that it applies an additional layer of approval to banks looking to engage in crypto-related activities. This also urged the Federal Reserve and FDIC to confirm that banks can offer both offers and outsources under their supervision.
Due to regulator uncertainty, banks have been hesitant to enter the crypto location. Between 2022 and 2023, FDIC allegedly asked some financial institutions to stop or limit their crypto activities. This led banks to retreat from offering digital asset services despite the demand of institutional and retail investors.
The coinbase push comes as a regulatory environment change under the administration of President Donald Trump. Trump has appointed regulators seen as more open for Crypto and recently canceled an SEC rule that has made it expensive to offer crypto custody to banks.
The time of the coinbase letter is notable as the Senate Banking Committee prepares for hearing on the “debanking” – the practice of cutting financial services to some industries including Crypto. The coinbase has long argued that restrictive banking policies make it difficult to reach traditional financial services for crypto firms.
The request of the coinbase is supported by the three major law firms, arguing that the current laws already allow banks to join with crypto firms. OCC and FDIC refused to comment, and the Federal Reserve has not yet responded.
