Cryptocurrency brokerage firm Coinbase has met with US regulators to discuss applying for a banking license, according to an anonymous source familiar with the matter.
The Wall Street Journal reports that the firm, one of the largest in the cryptocurrency industry, met with regulators at the US Office of the Comptroller of the Currency (OCC) in early 2018 to discuss applying for a national banking charter, which preempts state-level financial regulations. Coinbase did not immediately respond to a request for comment.
Acquiring a banking license would expand the line of services that Coinbase could offer its customers and would remove the need for it to find a banking partner willing to work with a firm that offers cryptocurrency trading.
It would also help Coinbase’s sales pitch to the large institutions it hopes to attract to its platforms. The firm has begun to roll out a wide variety of products for institutional investors — including cryptoasset custody — but many institutions feel more comfortable working with custody partners that have conventional banking licenses.
The report also states that cryptocurrency financial services startup ivyKoin met with officials at the Federal Deposit Insurance Corporation (FDIC) in recent weeks, a meeting that ivyKoin President Gary Fan has publicly confirmed.
However, applying for a banking license would also subject these firms to a litany of new regulations, perhaps offsetting the benefits.
“Most fintechs come to us because they have heard of this thing called a national banking charter that gives them pre-emption across state lines,” the publication cites Comptroller of the Currency Joseph Otting as saying at an industry meeting last month. “When they come and they speak to us, and they understand what it really takes to be a bank, they kind of glaze over and often leave skid marks leaving the building.”
As CCN reported, Coinbase is said to have approached the SEC about becoming a registered broker-dealer. The company is also one of only five firms that have received New York’s BitLicense, which is required to facilitate cryptocurrency trading in the highly-regulated state.
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Last modified: May 20, 2020 8:47 PM UTC