Coinbase just got conditionally approved to become a federally regulated bank and nobody seems to know how to feel about it

So the OCC conditionally approved Coinbase to operate as a national trust company this month and the responses have been basically split between “this is great for institutional adoption” and “this is the company that got sued by the SEC two years ago becoming a federally chartered financial institution” which are both true at the same time and that tension is interesting. The thing to understand about a national trust charter is it’s not a full bank, Coinbase can’t take deposits or make loans…

but it does make them a federally regulated custodian which means the 80% of global digital asset ETFs they already custody would now sit inside a framework that conservative asset managers, pension funds and insurance companies can actually engage with without their compliance teams having a panic attack. That’s not nothing. That’s actually a lot.

The part that gets a little philosophically weird if you think about it too hard is that Coinbase’s entire value proposition for the last decade has been “we are the bridge between crypto and the traditional financial system” and getting an OCC trust charter is sort of the completion of that arc in a way that makes you wonder what comes next. Like the bridge has now become part of the building it was connecting to.

BitGo, Circle, Fidelity Digital Assets, Ripple and Paxos all got similar conditional approvals around the same time which means the largest custodians and stablecoin issuers in the space are all becoming federally regulated entities simultaneously while the CLARITY Act stablecoin yield fight is still unresolved and Coinbase is publicly opposing the latest draft language.

So we have a situation where Coinbase is becoming a bank while actively lobbying against the rules governing what banks can do with stablecoins. “Extremely normal regulatory environment.​​​​​​​​​​​​“