Coinbase Sends Letter to Regulators Urging Crypto and Banking Integration

• Coinbase urges U.S. regulators to ease restrictions, enabling smoother crypto-banking partnerships.
• Clearer regulations could boost crypto adoption, potentially driving market growth.

Coinbase is making another attempt to convince U.S. regulators to facilitate partnerships between traditional banks and the crypto industry. Reiterating CNF’s previous coverage, Coinbase has initiated this push by bridging crypto and fiat with Apple Pay integration for iPhones in 2024.

By a Bloomberg report, In a recent letter to three key banking regulators, the cryptocurrency exchange called for a smoother relationship between the two sectors. This plea comes as Coinbase aims to encourage banks to offer services like crypto custody and transaction handling.

Addressed to the Federal Reserve Board of Governors, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), Coinbase urged the OCC to withdraw an interpretive letter that it claims imposes a “de facto application process for novel bank activities,” effectively impeding banks from entering the digital asset market.

Furthermore, Coinbase requested that the Fed and the FDIC confirm that state-chartered banks under their jurisdiction may both provide and outsource custody and execution services related to crypto.

Addressing Regulators to Bridge the Gap and Clarify Existing Laws

Coinbase’s letter was sent to the OCC, the Federal Reserve, and the FDIC. The exchange asked these agencies to reconsider previous stances that have hindered the ability of banks to engage with crypto firms.

Faryar Shirzad, Coinbase’s Chief Policy Officer, emphasized that the letter is simply a request for regulators to clarify that existing federal laws already permit financial institutions to work with crypto firms. According to Shirzad, the goal is to ensure regulatory bodies align their actions with the law, confirming that crypto services are not inherently prohibited.

Coinbase’s push aligns with recent statements by Federal Reserve Chair Jerome Powell, who remarked that financial institutions can indeed service crypto entities as long as they follow the rules. This comes as a relief to many in the crypto space, suggesting a more open path for integration.

A Positive Impact on Crypto Prices?

As regulatory hurdles begin to lower, the crypto market could be poised for growth. Bitcoin (BTC), Ethereum (ETH), and other major cryptocurrencies have historically reacted positively to similar news, with market optimism rising whenever discussions around crypto and banking integration gain momentum.

As of the time of writing, Bitcoin (BTC) is priced at $98,156.45, down 2.22% in the past day and 3.84% over the past week.