Coinbase Pushes to Foster Crypto Collaboration With Banks With New Letter to Regulators

The exchange sent a correspondence to three top US bank watchdogs, seeking their endorsement to foster partnerships between financial institutions and crypto companies. As Bloomberg reported, the letter urged the regulators to reconsider their stance and allow a smoother relationship between the two sectors.
Coinbase Seeks to Shatter Regulatory Barriers
The exchange addressed the communication to the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board of Governors (Fed), and the Federal Deposit Insurance Corp. (FDIC). Coinbase vied for the federal agencies to allow banks to offer crypto-related services, including custody.

Bloomberg reported that Coinbase asked the OCC to retract an earlier letter to financial institutions discouraging new sectors like crypto firms from interacting with banks. It insisted that such a de facto rule impeded fostering a relationship between banks and digital asset firms.

Furthermore, the crypto exchange demanded that the Fed and FDIC confirm that state-chartered banks under the agencies could provide both crypto custody and transaction execution services.
Exchange Says Existing Laws Allow Commingling
Coinbase’s chief policy officer, Faryar Shirzad, stated that the Coinbase letter sought to clarify that the agencies followed existing laws. He noted that existing federal regulations already allowed banks to commingle with cryptocurrency firms, and the letter was just to confirm compliance.

Faryar reiterated Coinbase’s proactiveness in ensuring that regulatory tides continue to fall in place for crypto firms. Specifically, he mentioned that the leading exchange is committed to ensuring that the hurdles withholding crypto firms from broader participation in the financial institutions fall through.

Notably, Fed chair Jerome Powell recently stated that no laws hindered financial institutions from servicing crypto entities. After announcing the decision to keep interest rates unchanged, he noted that they can “perfectly service” digital asset institutions as long as they follow the rules.

Meanwhile, crypto industries have made considerable progress in fighting the “debanking” myth following Donald Trump’s inauguration. For context, under a new look, the Securities and Exchange Commission (SEC) has repealed the Staff Accounting Bulletin (SAB 121) that stopped banks from holding digital assets.