The Independent Community Bankers of America (ICBA) is urging the U.S. Office of the Comptroller of the Currency to rescind or suspend its conditional approval of Coinbase Global’s application for a national trust bank charter.
The ICBA asks for the approval to be rescinded until criminal allegations against Coinbase’s wholly owned subsidiary, Coinbase Financial Markets Inc., are resolved.
The request follows the New York State Attorney General’s lawsuit alleging that the Coinbase Global subsidiary is violating New York and federal laws by running illegal prediction markets that lack consumer protections and internal controls.
“The OCC has always taken allegations of criminal misconduct involving applicants and affiliates thereof very seriously. Applications are typically delayed or denied when criminal allegations are made against applicants and or their subsidiary companies, or when federal or state criminal investigations are revealed. If the application is not withdrawn or denied, the OCC will ordinarily impose an enhanced compliance regime to ensure that the bank is not used for unlawful purposes,” ICBA officials wrote to the OCC.
The letter also states that the application from Coinbase National Trust Company fails to meet statutory chartering standards, presents compounding safety and soundness risks, and would set a dangerous precedent for the structure of the U.S. banking system.
“CNTC presents an unprecedented risk profile for the OCC: uninsured status, limited Federal Reserve emergency liquidity access, revenue correlation with crypto market stress, massive scale, and a dominant market position. CNTC could become large and interconnected enough that failure would disrupt traditional bank and financial services markets. Yet the OCC would lack the resolution tools available for systemically important deposit-taking banks,” The ICBA letter stated.