WASHINGTON, April 2 — The Office of the Comptroller of the Currency has granted preliminary conditional approval to Coinbase Global Inc.’s application to establish Coinbase National Trust Company in New York, a proposed national trust bank that would provide digital asset custody services as a fiduciary, primarily for institutional clients, according to OCC Corporate Decision No. 1370 dated April 2.
The OCC said the proposed bank would be a wholly owned subsidiary of Coinbase Global Inc. and would provide custody services along with related activities, including certain transactional services for custody customers in connection with their custodied fiat currency and digital assets.
The agency said the bank would have its main office in New York and that Coinbase plans to migrate the entirety of the custody business currently conducted by Coinbase Custody Trust Company LLC, a New York State Department of Financial Services-chartered limited purpose trust company, to the proposed national trust bank over a three-year de novo period.
The approval is preliminary only. The OCC said final approval authorizing the bank to commence business will not be granted until all preopening requirements are met and that the agency retains the right to modify, suspend, or rescind the preliminary conditional approval if interim developments warrant such action.
Proposed custody and transactional activities
The OCC said Coinbase National Trust Company plans to provide digital asset custody in a fiduciary capacity and to permit custody customers to accept, hold and transfer custodied fiat currency and digital assets in their custodial accounts.
The decision states that those transactional services would be offered only to custody customers and would relate only to custodied assets.
The OCC also said the proposed bank would facilitate custody clients’ access to certain products offered by Coinbase affiliates, including staking, Prime Trading and Prime Financing, under the bank’s authority to act as a finder, and would not provide those services directly.
OCC review of the application
The OCC said it received five comments on the application, including from trade groups and community groups, raising issues including the agency’s authority, disclosure and comment procedures, prior enforcement actions involving affiliates, Community Reinvestment Act applicability, stablecoin issues, securities-law implications, and supervisory capacity.
The agency said the proposed activities are permissible for a national trust bank under applicable law and that stablecoin-related arguments were not relevant because the proposed bank does not plan to issue stablecoins.
The OCC also said the Community Reinvestment Act does not apply because the proposed bank would not be an insured depository institution.
The OCC added that it found favorably with respect to management competence, safe-and-sound operation, and the organizers’ ability to comply with laws and regulations, and said compliance with Bank Secrecy Act and Office of Foreign Assets Control requirements would be addressed through supervision.
Operational conditions and capital requirements
The decision imposes multiple conditions, including that the bank must limit its operations to those of a trust company and related activities and must obtain OCC non-objection before significant deviations from its business plan.
The OCC said the bank must maintain at least $60 million in tier 1 capital and that the greater of at least 50% of tier 1 capital or $30 million must be held in eligible liquid assets during the bank’s first three years of operation.
The OCC also said the bank must maintain 180 days of operating expenses in eligible liquid assets, separate from the liquidity required under the capital condition, and must obtain prior OCC non-objection before appointing senior executive officers or directors during organization and throughout its first three years of operation.
The approval also granted waivers from the director residency requirement for Alesia Haas, Brian Dong, Dana Wagner and Paul Grewal.
Next steps toward final approval
The OCC said the bank may begin organizing after submitting its organizational documents but may not commence banking operations until all conditions are satisfied and final approval is granted.
The agency said the approval will expire if capital is not raised within 12 months or if the bank does not open within 18 months.
