Coinbase National Trust Receives Full Federal Charter, Elevating Institutional Custody Operations
Coinbase announced Monday that its subsidiary, Coinbase National Trust, has been granted a full national trust bank charter by the U.S. Office of the Comptroller of the Currency (OCC). This upgrade from a conditional approval received in April transforms the entity into an operational, federally chartered trust bank. Headquartered in New York, Coinbase National Trust will assume the role of trustee for Coinbase’s institutional custody business, currently managed by a New York State Department of Financial Services (NYDFS) chartered subsidiary. This development positions Coinbase as one of the few crypto-native companies to achieve full federal operational status.
The journey to this federal charter has been nearly eighteen months in the making. Coinbase initially applied to establish Coinbase National Trust Company with the OCC on October 3, 2023. The OCC issued a preliminary conditional approval, designated as Company Order No. 1370, on April 2, 2024. This approval stipulated that final authorization and operating authority would not be granted until all pre-opening requirements were met, with the OCC reserving the right to modify, suspend, or revoke the approval at any time. Over the subsequent months, Coinbase focused on bolstering its compliance systems, recruiting necessary personnel, and undergoing regulatory review. The final charter was signed by the OCC on Friday, with the company making the announcement on Monday. Coinbase had previously detailed its strategic plans in an official blog post following the April conditional approval.
The OCC’s order clearly delineates the operational boundaries for Coinbase National Trust. The bank is restricted to trust company and related activities, explicitly avoiding the definition of a “bank” under the Bank Holding Company Act. This means it cannot simultaneously accept demand deposits and engage in commercial lending. It will not participate in federal deposit insurance, and customer fiat currency holdings will be maintained in “for the benefit of others” (FBO) accounts at third-party banks, thus not becoming a deposit liability of the trust bank itself.
The approved operations are structured around three core functions. Primarily, it will act as a trustee to safeguard digital assets for institutional clients. Secondly, it will enable custody clients to receive, hold, and transfer fiat and digital assets within their own accounts. Thirdly, the trust bank will serve as a referral point, directing custody clients to products offered by Coinbase’s affiliated entities, such as Staking, Prime Trading, and Prime Financing, although these services will not be directly provided by the trust bank. In essence, the charter is for a federal trust bank, not a full-service commercial bank.
According to the OCC’s approved plan, Coinbase’s existing custody operations, currently handled by Coinbase Custody Trust Company under NYDFS charter, will be fully transferred to the new federal trust bank within a three-year de novo period. For institutional clients, the key distinction lies in the regulatory oversight. Previously, they navigated a patchwork of state-level licenses and examinations; now, they will operate under a unified federal framework encompassing capital requirements, fiduciary duties, and examination standards.
The foundational strength of Coinbase, as detailed in its application, underscores the significance of this charter. Founded in 2012, the company employs over 4,200 individuals and serves clients in more than 100 countries. For the quarter ending June 30, 2024, it reported $237 billion in trading volume and $425 billion in assets on its platform. In May 2024, Coinbase became the first crypto company to be included in the S&P 500 index. Integrating the world’s largest crypto custody business into a federally chartered trust bank effectively places these platform assets directly under federal banking regulatory oversight.
However, the path has not been without challenges. The Independent Community Bankers of America (ICBA) submitted a letter of opposition to the OCC on November 3, 2023. The ICBA argued that Coinbase’s business model does not align with the statutory requirements for a national trust bank and that the OCC’s interpretive letters, which permit non-fiduciary business activities, are invalid due to a lack of required notice and public comment. The ICBA also cautioned that granting a federal banking system entry ticket to a crypto institution without deposit insurance provides legitimacy without imposing obligations to the public. The advocacy group NCRC also issued a statement criticizing the conditional approval, asserting that banking charters should serve the public interest rather than legitimize companies with questionable track records.
A significant catalyst for these developments has been the GENIUS Act, which opened the door for federally chartered institutions to issue payment stablecoins, providing companies primarily focused on custody with an avenue for stablecoin issuance. The OCC’s approval list has subsequently become a roster of crypto firms seeking similar charters. Companies such as BitGo, Fidelity Digital Asset Services, Paxos, Ripple, Bridge, and Crypto.com’s Foris DAX have sequentially obtained conditional or full approvals over the past year. Coinbase, as the largest entity in this group, has now secured the crucial piece of federal trust status.
