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<ul class="wp-block-list"><li>Community banks oppose Coinbase charter, citing gaps in risk controls and regulatory oversight standards.</li><li>Critics warn crypto firms may gain banking privileges without meeting full compliance requirements.</li><li>Debate ties to CLARITY Act as stablecoin yield concerns raise risks of deposit shifts from banks.</li></ul><p>U.S. community banks have moved <a href="https://x.com/coinbureau/status/2040270611931599182?s=20" rel="noopener noreferrer nofollow">against</a> Coinbase after the Office of the Comptroller of the Currency granted conditional approval for its national trust bank charter on Thursday. The backlash centers on concerns over consumer protection and systemic risk, as banking groups argue the move allows crypto firms to gain banking privileges without meeting full regulatory standards.</p><h2 class="wp-block-heading" id="strong-banks-raise-concerns-over-regulatory-gaps-strong"><strong>Banks Raise Concerns Over Regulatory Gaps</strong></h2><p>The Independent Community Bankers of America said Coinbase’s application falls short on key regulatory requirements. The group cited weaknesses in risk controls, profitability, and resolution planning. It also argued that the <a href="https://cryptofrontnews.com/major-us-banks-weigh-lawsuit-over-occ-crypto-licenses/" rel="noopener noreferrer nofollow">OCC</a> lacks authority to extend trust powers tied to crypto activities without stricter oversight.</p><p>According to the ICBA, nonbank firms increasingly seek banking benefits without following the same rules. The group warned that such approvals could expose customers to higher risks. These concerns link directly to broader debates about crypto oversight.</p><p>However, Coinbase stated it does not intend to operate as a traditional bank. The company said the charter would support its custody business rather than lending or deposit-taking. It also noted the license would bring its operations under federal supervision.</p><h2 class="wp-block-heading" id="strong-financial-groups-widen-criticism-strong"><strong>Financial Groups Widen Criticism</strong></h2><p>Beyond community banks, other organizations have also raised objections. The National Community Reinvestment Coalition criticized the OCC’s decision, citing risks to public interest. Policy Director Tara Flynn said Coinbase does not meet the requirements for a national trust bank charter.</p><p>Additionally, Americans for Financial Reform Education Fund warned about exposure to crypto volatility, fraud, and money laundering. These groups stressed that granting such approvals could weaken existing financial safeguards.</p><p>At the same time, <a href="https://cryptofrontnews.com/coinbase-clo-paul-grewal-says-clarity-act-deal-likely-by-friday/" rel="noopener noreferrer nofollow">Coinbase</a> emphasized that it would not engage in fractional reserve lending. The company said the move aligns with integrating crypto into the regulated financial system.</p><h2 class="wp-block-heading" id="strong-policy-debate-ties-into-broader-crypto-bill-strong"><strong>Policy Debate Ties Into Broader Crypto Bill</strong></h2><p>The dispute comes as lawmakers continue discussions on the Digital Asset Market <a href="https://cryptofrontnews.com/charles-hoskinson-challenges-brad-garlinghouse-on-clarity-act-risks/" rel="noopener noreferrer nofollow">Clarity Act</a>. Notably, disagreements over stablecoin yields remain unresolved. Banking groups argue that yield-bearing stablecoins could shift deposits away from traditional banks.</p><p>Bank of America CEO Brian Moynihan previously warned that such products could pull trillions from the banking system. Meanwhile, Coinbase executives indicated progress in legislative talks, though key issues persist.</p><p>As a result, the Senate Banking Committee has delayed the bill’s markup. This delay keeps the broader regulatory framework for digital assets unsettled.</p><p>The post <a href="https://cryptofrontnews.com/u-s-banks-challenge-coinbase-trust-charter-approval-risks/" rel="noopener noreferrer nofollow">U.S. Banks Challenge Coinbase Trust Charter Approval Risks</a> appears on <a href="https://cryptofrontnews.com" rel="noopener noreferrer nofollow">Crypto Front News</a>. Visit our website to read more interesting articles about cryptocurrency, blockchain technology, and digital assets.</p>

U.S. Banks Challenge Coinbase Trust Charter Approval Risks

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