Coinbase clears key regulatory hurdle in bid to bolster its stablecoin business

coinbase The company said Thursday that it has received conditional approval from the U.S. Office of the Comptroller of the Currency (OCC) to operate as a trust bank.

Paul Grewal, Coinbase’s chief legal officer, told CNBC that the cryptocurrency exchange could operate payment products in addition to its federally supervised custody business if completed.

“Longer term, we will be able to explore with OCC things that we think will extend and expand crypto payments in all kinds of new, interesting and important directions, by offering not only custody products, but also other infrastructure products, especially those related to payments,” Grewal said.

The company has made clear that it will not become a commercial bank, take retail deposits or engage in fractional reserve banking (the practice of large banks holding only a portion of customer deposits in reserve while lending the rest). Still, a trust charter would give it the legal authority, access to banking infrastructure and regulatory credibility to move, hold and distribute money more efficiently, perhaps setting it up to compete more with other countries. PayPal or Square.

The approval is a preliminary agreement that Coinbase’s application meets key regulatory requirements to operate as a trust bank, subject to the satisfaction of certain conditions.

Coinbase will be regulated directly by the OCC, one of the three main federal banking regulators, rather than being subject to state-based regulations, which have been a major pain point for companies in fast-moving industries like crypto.

Endorsing President Donald Trump’s promise to make the United States the “crypto capital of the world” during his second term, Grewal said it was “the only way to do it” to this point. The Biden Administration has previously taken an anti-crypto stance that it believes has hindered the industry’s growth and leadership on the global stage.

State-by-state regulations are creating headaches for many fast-paced startups operating in the heavily regulated financial services space. Instead of a single rulebook, companies face 50 slightly different rules that can not only slow growth but also increase costs.

“We wouldn’t be pursuing this if we didn’t think there were significant opportunities ahead in crypto infrastructure, including payments,” Grewal said. “The OCC’s conditional approval is an important recognition by the agency that they want to see products and services, particularly around payments and custody, developed primarily here in the United States.”

Coinbase has created a payment strategy that focuses specifically on stablecoin making. Apartment-Issuance US Dollar – mainstream global payment method. Last year it launched Coinbase Payments, a product that includes wallet integrations and stablecoin payment processing for platforms and merchants. It also launched a payment protocol. Shopify Built on in-house blockchain Base. Separately, it has partnered with Shopify and Stripe, allowing its merchant partners to accept its USDC stablecoin.

Coinbase CEO Brian Armstrong also said the company has a “stretch target” to make USDC the world’s No. 1 stablecoin. Tether’s USDTHe stated that he aims to make Coinbase “the world’s number one financial services app” within the next few years. Armstrong has also become one of the most prominent private sector voices on Capitol Hill when it comes to crypto policy, particularly in the recent negotiations around the Openness Act.

While trading for retail and institutional investors is Coinbase’s core business, the company is trying to increase consumer engagement through new products and services, taking advantage of pro-crypto policies under the Trump administration.