Coinbase Explores US Bank Charter Application

In a significant move for the cryptocurrency industry, Coinbase, a leading US-based crypto exchange, has confirmed its consideration of applying for a US federal bank charter. A spokesperson stated that while the decision is under active review, no formal application has been submitted at this time.

This development follows recent reports suggesting several major crypto companies are similarly exploring this path. Coinbase joins Circle, Paxos, and BitGo among those potentially seeking banking licenses. The potential benefits include functioning as traditional lenders, offering deposit services, and facilitating loans.

However, the increased regulatory scrutiny and reporting requirements associated with a bank charter must also be weighed. The experience of Anchorage Digital, a crypto firm already holding a federal bank charter, illustrates this point. Recent reports indicate that Anchorage Digital is under investigation by the US Department of Homeland Security.

While Coinbase hasn’t publicly disclosed its reasoning, the potential to operate within a more established financial framework and the evolving regulatory landscape may be significant factors driving this consideration. The move reflects the growing integration of cryptocurrency into the mainstream financial system.

A Changing Regulatory Landscape

This decision comes amid a period of significant change in US crypto regulation. Recent comments from Federal Reserve Chair Jerome Powell highlight a shift towards a more accepting stance on stablecoins and the importance of establishing a legal framework to support their wider adoption. This change in tone is palpable throughout the US government, as shown by the advancement of bills like the STABLE and GENIUS Acts.

The STABLE Act, passed by the House Financial Services Committee, and the GENIUS Act, passed by the Senate Banking Committee, both aim to regulate the stablecoin industry, but with different approaches. While they differ on certain aspects, both bills strive to create a clear legal foundation and enhance AML and liquidity safeguards.

The ongoing legislative process shows the US government is actively shaping a regulatory framework that aims to balance innovation and protection. This, coupled with Paxos’s recent conditional approval for a bank charter, hints at a future where cryptocurrency and traditional finance are increasingly intertwined. The ongoing evolution of stablecoin regulations is pivotal to how the future of cryptocurrency will integrate with the broader financial ecosystem.

Related: Crypto companies seeking bank charters under Trump admin — Report