TL;DR
- Coinbase’s Chief Legal Officer Paul Grewal strongly pushed back against US banking groups seeking to block the exchange’s national trust bank charter.
- He argued banks are protecting their market dominance instead of supporting safer regulated crypto services.
- The coordinated opposition shows that traditional financial institutions are working to slow crypto’s entry into federally supervised finance, even as digital asset firms seek equal regulatory treatment.
Paul Grewal, Chief Legal Officer at Coinbase, criticized several banking associations after they pressed US regulators to block the company’s request for a national trust charter. His comments followed a letter from the Independent Community Bankers of America urging the Office of the Comptroller of the Currency to reject the application. Grewal questioned why banks oppose a regulated structure that could raise industry standards, arguing that legacy institutions resist competition from innovative financial models.
The banking groups claim Coinbase’s proposal falls short of chartering requirements in corporate governance, long-term financial resilience, and crisis management planning. They also challenge the legal basis for chartering crypto-focused trust banks, suggesting prior regulatory guidance did not go through the usual public comment process. Coinbase maintains that it is seeking the same federally supervised environment banks operate under, a move that could expand investor protections and transparency for digital asset custody. Supporters of regulated crypto banking argue that integrating blockchain-based services within existing oversight frameworks can improve financial inclusion and modernize outdated payment rails that struggle with cross-border transfers.
Stablecoin Regulation Debate Expands
A second coalition of US banking associations urged the Treasury Department to tighten restrictions on stablecoin-linked rewards. They argue that platforms may create indirect yield options that resemble deposit interest. Bank lobbyists warn that such incentives could shift deposits away from community lenders and reduce available credit for small enterprises.
Crypto advocates counter that stablecoins enable faster, low-cost payments, and that sensible regulation can support competition without harming bank balance sheets. Faryar Shirzad, Coinbase’s Chief Policy Officer, responded that current legislation already distinguishes between issuer-paid interest and third-party rewards, making the banks’ position more about preserving old business models than protecting consumers.
Regulators are expected to spend 12 to 18 months reviewing the Coinbase application, with public feedback influencing the outcome. Only Anchorage Digital currently holds a national trust charter. Approval for Coinbase could broaden regulated access to digital asset services and offer a model for future crypto applicants, blending innovation with supervisory standards that enhance safety and competition.
