Coinbase Advocates for Crypto Banking

Coinbase urged three federal banking agencies to address alleged debanking in the crypto industry, asserting banks should offer crypto services directly or via trusted third parties.

This week, Coinbase sent a letter to the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), insisting on the removal of “unlawful, inconsistent impediments” obstructing crypto service partnerships with banks.

Faryar Shirzad, Coinbase’s chief policy officer, stated, “Coinbase is taking a significant step towards ending the debanking of crypto by calling on @USOCC, @federalreserve, and @FDICgov to make it clear that banks can engage in crypto activity. For years, US bank regulators have undemocratically barred banks from providing crypto services, and this must stop.”

Coinbase specifically requested the rescission of an OCC interpretive letter, which it claims unlawfully imposes a de facto application process for new banking activities without proper rulemaking, violating the Administrative Procedure Act. The company also seeks confirmation that state-chartered banks can provide custody and execution services.

So far, the Fed has not commented on Coinbase’s request. An FDIC representative stated the agency does not comment on letters it receives, while the OCC also declined to provide a comment.

Renewed Attention on Debanking Issues

Economic discussions around crypto debanking have intensified, prompting investigations and dissatisfaction from Republican lawmakers and crypto firms facing hurdles with banking services in the U.S. Congress will hold two hearings this week addressing the issue, with Coinbase’s Chief Legal Officer Paul Grewal set to testify in the House.

Coinbase’s letter included a legal analysis from three prestigious law firms advocating for the OCC’s letter to be withdrawn and supporting banks’ right to offer crypto services. The platform also previously sued the FDIC, arguing it has unfairly isolated the crypto industry from banking.

Recent comments from Federal Reserve Chair Jerome Powell indicated that banks could serve crypto customers, provided they effectively manage the associated risks. Future regulatory stances under the new Trump administration, which has designated Travis Hill as acting FDIC chair, remain uncertain, though Hill has expressed the need for better clarity in banks’ crypto interactions.

A TD Cowen note from Jaret Seiberg indicated that banks would minimize exposure to crypto until anti-money laundering risks are adequately addressed.