Traditional banks pose obstacles to cryptocurrency’s pursuit of official regulatory acceptance

Bitget-RWA2025/11/05 01:02

By:Bitget-RWA

- ICBA opposes Coinbase's trust bank charter bid, claiming it protects traditional banking dominance over consumer interests. - Coinbase defends its proposal as innovation-focused, seeking to bridge crypto and traditional finance under existing regulations. - Fed's "skinny master account" proposal aims to balance crypto integration with systemic risk mitigation, reflecting regulatory tensions. - Coinbase's $1.9B Q3 revenue and $2B BVNK acquisition highlight its push into traditional finance amid pending re

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The Independent Community Bankers of America (ICBA) has stepped up its resistance to Coinbase’s bid for a national trust bank charter, portraying the move as an attempt by established banks to maintain their control over the market rather than to benefit consumers. In correspondence with the Office of the Comptroller of the Currency (OCC), the ICBA claimed that Coinbase’s plan relies on “unproven” risk management strategies and would face difficulties staying profitable during downturns in the crypto market, according to

Cointelegraph

. Paul Grewal, Coinbase’s chief legal officer, countered by accusing the banking association of favoring “regulatory barriers” instead of fostering innovation, remarking, “It’s hard to imagine objecting to a regulated trust charter simply because you’d rather see crypto remain... outside regulation,” as reported by

LookOnChain

This dispute highlights the ongoing friction between digital asset companies and legacy financial institutions as they vie to shape the rules for the crypto sector. Coinbase’s submission, made in October 2023, seeks to establish the

Coinbase

National Trust Company, a non-insured entity intended to broaden its custody offerings for both fiat and digital currencies, according to

eMarketer

. The ICBA’s objections focus on doubts about the OCC’s capacity to safely wind down a crypto-centric trust in times of financial stress, pointing to the absence of a proven receivership process for such organizations, as noted by

American Banker

. Coinbase, meanwhile, has stressed that its application does

not

intend to turn it into a bank, but rather to connect the crypto world with traditional finance under current legal standards, according to

Blockonomi

Traditional banks pose obstacles to cryptocurrency’s pursuit of official regulatory acceptance image 0

The regulatory standoff is unfolding as the Federal Reserve adjusts its policies. Recently, the U.S. 10th Circuit Court of Appeals upheld the Fed’s decision to deny Custodia Bank—a crypto-oriented bank—a master account, reinforcing the central bank’s discretion to prioritize stability over broader access, according to

TradingView

. Fed Governor Christopher Waller has suggested a middle ground: “skinny master accounts” for fintech and stablecoin companies, which would allow restricted access to the Fed’s payment network under tight regulations, as reported by

CryptoNews

. This solution could enable crypto businesses to link with established financial systems while reducing systemic threats.

Coinbase’s latest earnings and strategic initiatives further demonstrate its expansion into mainstream finance. The platform posted $1.9 billion in revenue for Q3 2025, with net profits of $432.6 million, fueled by increased trading activity and a broader range of assets, according to

NewsBTC

. In addition, Coinbase is close to finalizing a $2 billion purchase of BVNK, a stablecoin provider, to strengthen its business payment capabilities, as reported by

CoinPedia

. These moves are part of its larger plan to capitalize on regulatory certainty, as reflected in its support for the pending U.S. crypto market structure legislation, CoinPedia noted.

The OCC’s assessment of Coinbase’s trust charter request could last up to a year and a half, with similar proposals from Ripple, Circle, and others also awaiting decisions, according to eMarketer. Comptroller Jonathan Gould has advocated for allowing compliant fintechs into the banking sector, describing it as vital for ensuring fair competition. Nevertheless, the ICBA and other banking organizations persist in questioning the legal and operational soundness of crypto charters, arguing that the OCC’s interpretive actions have not undergone adequate public review, as American Banker reported.

As the discussion intensifies, the final decision will likely determine whether crypto companies can achieve federal recognition to compete head-to-head with traditional banks, or if regulatory hurdles will continue to serve as a shield for established players.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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1. Technology stocks fell sharply as investor interest shifted toward energy and selected defensive assets. From October 10 to 16, the Nasdaq 100 declined 5.49% and the S&P 500 fell 1.95%, while the Dow gained 0.67% and WTI crude rose 10.41%. BTC, ETH, and SOL declined 1.27%, 2.65%, and 4.44%, respectively. This week's technology earnings will be an important test of whether revenue growth, margins, and cash flow can justify current valuations. Better-than-expected results could help stabilize markets in the near term. 2. Crypto continues to see pockets of strong activity, but a broad-based altcoin season has yet to materialize. CoinMarketCap's (CMC) Altcoin Season Index stood at 54 as of the October 18 UTC daily observation, below the altcoin-season threshold of 75, while BTC dominance rose to 60.08%. Our proxy leverage ratio fluctuated between 4.00 and 4.07 during the week, showing no sustained increase and suggesting limited appetite for additional leverage. Meanwhile, as major exchanges expand access to traditional financial assets, the recent sell-off in AI-related equities could attract short-term speculative capital away from crypto. Such capital rotation could make it more difficult for a new altcoin season to take hold. 3. Papertrade's loss-to-mine model has generated significant interest across the crypto community. The protocol combines high-leverage derivatives trading with zero slippage and a mechanism that rewards trading losses with PAPER tokens. Across the eight complete UTC days from October 10 to 17, cumulative reported revenue reached approximately $56.08 million, including $51.90 million distributed to token holders. With growing participation from key opinion leaders (KOLs), Papertrade has reportedly ranked among the top three platforms by profitability in the broader market recently. Assets to watch: BTC, ETH, SOL, ARB, OP, SKHYNIX, SKHY, META, TSLA, LRCX, and SPCX. Key research priorities this week: Cash flow performance in technology earnings; the relative discount and holding costs of the two SK Hynix contracts; and U.S. initial jobless claims and PMI data. Weekly market data cover the period through October 16, while research information was verified through October 18. Observation periods are specified separately for each chart.

Bitget•2026/10/19 06:51