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The Independent Community Bankers of America has urged federal regulators to reject Coinbase’s application for a national trust charter, arguing the crypto exchange fails to meet statutory standards and would set a “dangerous precedent” for the U.S. banking system.
In a November 3 letter to the Office of the Comptroller of the Currency, the ICBA cited concerns about governance, profitability, and market volatility risks associated with Coinbase National Trust Company.
Coinbase Chief Legal Officer Paul Grewal responded by accusing community and Wall Street banks of “protectionism,” claiming they prefer crypto to remain unregulated to protect their market position.
“Imagine opposing a regulated trust charter because you prefer crypto to stay unregulated,” — Paul Grewal, Chief Legal Officer, Coinbase, wrote on X. He further accused bank lobbyists of trying to “dig regulatory moats to protect their own.”
The Independent Community Bankers of America (ICBA) submitted a detailed opposition letter to the OCC on November 3, arguing that the Coinbase charter bank application failed to meet multiple statutory standards.
The ICBA cited deficiencies in governance, profitability, and sustainability, especially during volatile crypto markets, as potential risks to the financial system.
In its letter, the ICBA warned that Coinbase’s entry could set “a dangerous precedent for the structure of the U.S. banking system.” The group also challenged the legal foundation of OCC Interpretive Letter 1176, which permits national trust banks to engage in non-fiduciary activities beyond traditional trust services.
The ICBA argued that the interpretive letter was issued “without public notice or comment” under the Administrative Procedure Act, rendering it legally invalid as a basis for the Coinbase charter bank application.
Their opposition was echoed on X, where the ICBA urged regulators to reject the bid:
“The application fails to meet statutory chartering standards and would set a dangerous precedent for the U.S. banking system.” — Independent Community Bankers of America (@ICBA), November 4, 2025.
The controversy surrounding the Coinbase charter bank coincides with a broader industry debate over stablecoin regulation. On November 4, the American Bankers Association (ABA) and 52 state banking associations submitted a joint letter to the U.S. Treasury Department, urging stricter enforcement of the GENIUS Act, which prohibits stablecoin issuers from paying interest.
The banks warned that digital asset platforms might exploit loopholes by offering “interest through affiliates,” effectively bypassing the law. Senator Mike Rounds previously told Politico that such arrangements “look like an end-run on the original legislation.”
Federal Reserve Governor Christopher Waller echoed similar concerns:
“It’s not an investment vehicle. It’s not a time deposit where you’re holding it to earn interest,” — Christopher Waller, Governor, U.S. Federal Reserve.
Banking groups claim that interest-bearing stablecoins could lead to a 25.9% decline in bank deposits, wiping out $1.5 trillion in lending capacity and shrinking small business and farm credit by $110 billion and $62 billion, respectively.
Coinbase’s Chief Policy Officer, Faryar Shirzad, dismissed these concerns, arguing that the GENIUS Act distinguishes between third-party rewards and issuer-paid interest.
The OCC is expected to take 12 to 18 months to complete its review of the Coinbase charter bank application. The process allows for public comments, which could influence the final decision.
Under the leadership of Comptroller Jonathan Gould, a former Chief Legal Officer at Bitfury, the OCC has shown a willingness to engage with crypto institutions despite strong resistance from legacy banks.
Currently, Anchorage Digital remains the only crypto firm with a national trust bank charter, granted in January 2021. Other companies such as Ripple, Circle, and Paxos have also faced pushback from banking groups like the Bank Policy Institute (BPI).
The BPI has warned that if stablecoins are allowed deeper integration into the financial system without full safeguards, “crypto market shocks could infect the broader economy.”
As regulators weigh Coinbase’s future, the Coinbase charter bank dispute highlights a pivotal struggle between innovation and incumbency — one that could reshape how digital assets interact with the U.S. banking system for years to come.
