Coinbase has secured final approval from the Office of the Comptroller of the Currency (OCC) to operate as a federally chartered trust company. This move brings the firm's institutional custody business under a single federal regulator, marking a significant step in crypto's push for clearer regulatory frameworks. However, the approval did little to boost Coinbase's stock, which fell more than 2% in pre-market trading on Monday, pressured by Bitcoin's decline and on track to test a fresh two-year low.
The OCC's approval comes as comprehensive crypto legislation remains stalled. The Senate failed to advance the CLARITY Act in September, falling short of the required 60 votes. Democrats' victories in last week’s midterm elections could further complicate the bill’s prospects, shifting influence to the incoming Congress.
For Coinbase, the federal charter is primarily about institutional custody. The company safeguards over 80% of the world’s digital-asset exchange-traded funds and held $376.6 billion in assets at the end of September. The charter could make Coinbase more attractive to asset managers and hedge funds, providing a regulatory structure that large financial institutions can assess across state lines.
Despite the approval, Coinbase will not become a full-service commercial bank and cannot take ordinary retail deposits or make traditional loans under the trust charter. The company aims to explore additional payment products, particularly those that could advance the adoption of its USDC stablecoin. However, retail sentiment around USDC remained in ‘bearish’ territory over the past day.