Cryptocurrency brokerage firm Coinbase has met with U.S.A regulators to discuss applying for a banking license, according to a source familiar with the company.
The Wall Street Journal reports that the firm, one of the largest in the crypto industry, met with regulators at the U.S.A Office of the Comptroller of the Currency (OCC) in early 2018 to discuss applying for a national banking charter, which basically preempts state-level financial regulations.
Acquiring a banking license would expand the line of services that Coinbase could offer its customers and would remove the need for it to find a banking partner willing to work with a firm that offers crypto trading.
Coinbase did not immediately respond to our request for comment.
It would also help Coinbase’s sales pitch to the large institutions that it hopes to attract to its platform. The firm has begun to roll out a wide variety of products for institutional investors — including cryptoasset custody — however many institutions feel more comfortable working with custody partners that have conventional banking licenses.
The report also states that the cryptocurrency financial services startup we covered a few months ago, ivyKoin met with officials at the Federal Deposit Insurance Corporation (FDIC) in recent weeks, a meeting that ivyKoin President Gary Fan has publicly confirmed.
However, applying for a banking license would also subject these firms to a slew of new regulations, perhaps offsetting the benefits.
“Most fintechs come to us because they have heard of this thing called a national banking charter that gives them pre-emption across the state lines,” the publication cites Comptroller of the Currency Joseph Otting as saying at an industry meeting last month. “When they come and they speak and they understand what it really takes to be a bank, they kind of glaze over and often leave skid marks leaving the building.”
Coinbase is said to have approached the S.E.C about becoming a registered broker-dealer. The company is also one of only five firms that have received New York’s BitLicense, which is required to facilitate cryptocurrency trading in the highly-regulated state.