The largest US cryptocurrency exchange operator, Coinbase, has talked with US regulators about the possibility of getting banking licences, The Wall Street Journal has reported.
Citing an unnamed source familiar with the matter, the newspaper said that Coinbase had met with officials at the US Office of the Comptroller of the Currency in early 2018. The same source also said that, more recently, payment start-up Ivy Koin had a similar meeting with officials at the Federal Deposit Insurance. That meeting was confirmed by Ivy Koin president Gary Fan, the WSJ said.
Meanwhile, a Coinbase spokesperson declined to confirm the firm’s reported meeting with the OCC. She told the newspaper that “the firm is “committed to working closely with state and federal regulators to ensure we are properly licensed for the products and services we offer”.
Acquiring a banking licence would allow Coinbase widen the range of products it could offer, which could help it attract more institutional investors. Last week, the company launched a suite of products aimed at institutional investors, including a custody product through an SEC-regulated brokerage. Obtaining a banking licence would allow the company to offer custody services itself, the WSJ notes. The newspaper has previously reported that the firm is also seeking to become an SEC-regulated brokerage.
A banking licence would also mean that Coinbase would have to deal with only one federal regulator, instead of the dozens of state ones it currently answers to. However, banks in the US are subject to more regulation including rules governing their funding sources and consumer-facing activities, enforced by both state and federal bank regulators. Compliance with these regulations can mean hiring more lawyers and buying or revamping internal systems, The Journal notes. According to the newspaper’s source, Coinbase and Ivy Loin would only seek a bank charter if they decide that the benefits of becoming a bank outweigh the cost.