Ethereum News Today: Coinbase Launches ETH-Backed Loans as Banks Win Crypto Custody Rights

U.S. banks have received regulatory approval to hold Ethereum (ETH) and other cryptocurrencies for operational purposes, marking a significant shift in the financial sector's engagement with digital assets. The Office of the Comptroller of the Currency (OCC) issued guidance on November 18, 2025, allowing national banks to retain crypto assets for paying blockchain network fees and testing internal systems according to the report. This move enables institutions to directly interact with blockchain networks without relying on intermediaries, streamlining processes such as gas fee payments for transactions as per the guidance. The policy applies to major cryptocurrencies like Bitcoin (BTC), Ethereum, XRP, and Solana (SOL), and requires banks to maintain separate accounts for these activities according to industry sources.

The regulatory update follows a broader push to integrate crypto into traditional finance. The OCC's Interpretive Letter 1186 clarifies that banks can hold small amounts of crypto on their balance sheets for "reasonably foreseeable" operational needs, such as testing blockchain-based platforms or facilitating settlements according to official documents. Paul Barron, a prominent crypto advocate, highlighted that this removes previous barriers, allowing banks to execute on-chain transactions with greater autonomy and efficiency according to industry experts. The guidance also mandates adherence to safe practices and legal compliance, ensuring that institutions mitigate risks associated with digital asset management as stated in the policy.

Coinbase, one of the largest crypto exchanges, swiftly capitalized on the new rules by launching ETH-collateralized USDC loans for U.S. users on the Base network. The product, introduced this week, lets borrowers lock Ethereum as collateral to receive up to $1 million in USDC, leveraging the regulatory clarity provided by the OCC. This development aligns with broader industry trends, as Coinbase recently expanded its services through acquisitions and partnerships, including a $375 million buyout of token-launch platform Echo and a collaboration with Citigroup on institutional offerings according to industry reports.

The market reaction to the regulatory shift has been mixed. BlackRock's recent deposit of 64,707 ETH into Coinbase Prime-valued at over $198 million-sparked concerns about potential sell-offs, despite Ethereum trading above key support levels according to market analysis. Analysts note that while the asset remains stable, short-term volatility could persist as institutions navigate the new landscape as market data shows. Meanwhile, the OCC's decision has been framed as a pivotal step toward mainstream adoption, with critics under the Biden administration previously restricting crypto activities according to policy analysis. The Trump-era regulatory approach, which includes the March 2025 reversal of prior crypto restrictions, has accelerated this transition, enabling banks to custody digital assets and participate in stablecoin-related operations as reported by industry sources.

The policy shift also has implications for broader financial innovation. By permitting banks to test blockchain platforms internally, the OCC is fostering a controlled environment for experimentation, which could lead to new use cases in payments and institutional services as outlined in the guidance. However, the guidance stops short of allowing widespread speculative trading, emphasizing operational utility over investment.