Community Bankers of America (ICBA) has asked the Office of the Comptroller of the Currency (OCC) to reject Coinbase’s application for a national trust bank charter. The banks claimed that the cryptocurrency exchange lacks sufficient risk management and independent oversight. In a 12-page submission, the ICBA questioned Coinbase’s compliance, governance structure, and overall fitness to operate under a national charter. The organisation argued that granting the licence would undermine the safety and stability of the US banking system, setting what it called a ‘troubling precedent’ for digital asset companies seeking entry into federally regulated banking.
Legal and procedural objections
At the core of the ICBA’s argument is its challenge to OCC Interpretive Letter 1176, issued in January 2021. That letter concluded that national trust banks could conduct certain non-fiduciary activities outside traditional trust functions. The ICBA contends the guidance was adopted without public consultation, in violation of the Administrative Procedure Act, and therefore lacks legal validity. The group said the OCC failed to publish the letter in the Federal Register or solicit feedback despite its potential to alter long-standing banking rules.
Beyond legal objections, the ICBA also highlighted Coinbase’s regulatory history, referencing enforcement actions in New York, Connecticut, the United Kingdom, and the United States over the past five years. The letter noted that the exchange ‘has not gone a year without enforcement action,’ citing issues related to anti-money laundering controls and unlicensed activity.
A representative from Coinbase dismissed the ICBA’s claims, describing them as attempts by traditional banks to maintain competitive advantages by keeping cryptocurrency firms outside regulated frameworks. Company officials argued that the trust charter would promote greater oversight and consumer protection by bringing crypto custody within established regulatory structures.
Coinbase, a publicly traded company listed on Nasdaq, continues to operate under full US Securities and Exchange Commission reporting requirements. Despite facing multiple regulatory actions, the company has remained one of the few large exchanges to maintain operations in the US.
