Coinbase Considers US Federal Bank Charter Amid Regulatory Shifts

Coinbase, a US-based publicly traded crypto exchange, has confirmed that it is considering applying for a US federal bank charter. In a statement, a company spokesperson said that this is something Coinbase is actively considering but has not made any formal decisions yet. The comments follow recent reports suggesting that Coinbase and multiple other major crypto firms were planning to apply for a banking license in the United States. The firms in question include stablecoin issuers Circle and Paxos, and crypto custodian BitGo.

Coinbase did not clarify why it is considering pursuing a bank charter. However, the license could potentially allow crypto firms to operate like traditional lenders, taking deposits and making loans. On the other hand, firms that obtain banking charters are subject to stricter reporting and regulatory oversight. An example is Anchorage Digital, a crypto firm holding a federal bank charter. Despite obtaining the license, recent reports indicate that the US Department of Homeland Security’s El Dorado Task Force has reportedly launched an investigation into Anchorage Digital Bank.

Many crypto firms are likely to apply for a bank charter as the US regulators take a much softer stance on crypto regulation and integrate stablecoins in the broader financial system. The change in stance is visible at multiple levels of the US federal government. Federal Reserve Chair Jerome Powell recently said that as digital assets gain mainstream adoption, establishing a legal framework for stablecoins is a “good idea.” He also recognized that the crypto space delivered a consumer use case that “could have wide appeal.”

The US House Financial Services Committee passed a Republican-backed stablecoin framework bill earlier in April — the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act. Another bill that is moving through the US legislative process is the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. The STABLE and GENIUS bills differ in how they regulate the stablecoin industry in their current form. The GENIUS Act was introduced first and passed the US Senate Banking Committee in mid-March. The STABLE Act, on the other hand, emphasizes federal oversight, while the GENIUS Act seeks a more flexible path that considers both state and federal regulations.

The STABLE Act also enforces a two-year moratorium on issuing collateralized stablecoins that are backed by self-issued digital assets. The bill also enforces that stablecoin reserves be held separate from business funds. The GENIUS Act establishes a legal framework for stablecoin payments and leverages US-based stablecoin issuers in an attempt to reinforce the dollar’s global dominance. The bill also enhanced Anti-Money Laundering (AML) safeguards, reserve and liquidity standards and sanctions checks. It classifies stablecoin issuers as financial institutions.