Coinbase, one of the leading platforms in the cryptocurrency industry, has taken an important step to offer crypto custody services at the federal level by receiving the first approval for a national trust institution license from the US Office of the Comptroller of the Currency (OCC). This approval is the first step towards the company being able to operate as a fully regulated custodian.
Pre-approval and next stages
This preliminary approval by the OCC does not constitute a definitive license. Attention is drawn to a number of conditions that Coinbase must meet in order to receive a full license. These include steps such as establishing compliance processes, hiring key personnel and undergoing regular audits.
Regulators attach particular importance to Coinbase strengthening its risk management structure, protecting customer assets and complying with anti-money laundering rules. It is not possible to give full approval without meeting all requirements.
Once the license is complete, Coinbase will be able to operate as a federally uninsured national trust. While this structure allows the company to store digital assets on behalf of its customers, it prevents it from collecting deposits or granting loans.
Institutional demand and Coinbase’s strategy
Coinbase first applied for a license in October. In this process, we acted together with other important companies of the sector such as Ripple. Recently, EDX Markets exchange, supported by Citadel, also applied for a similar structure. These developments indicate that large institutions are increasingly interested in secure and regulated custody services for crypto assets.
For institutional investors, custody service means trust and compliance with legislation rather than buying and selling activities. For example, in order for a retirement fund to invest in crypto, it is preferred that the assets be held securely by a regulated institution. It is stated that a license obtained at the federal level provides additional assurance at this point.
Coinbase aims to reduce its dependence on transaction fees and diversify its revenue structure. Custody services can provide a more stable income stream against market fluctuations. The firm, which is currently the custodian of many US spot Bitcoin ETFs, provides asset protection services on behalf of fund managers.
The company has not yet made a new statement regarding this process.
