What happened?
Coinbase’s chief legal officer publicly blasted banking groups for trying to block the exchange’s bid for a national trust bank charter, calling their opposition protectionist. Multiple banking associations — led by the ICBA and backed by the ABA and state groups — filed formal letters urging regulators to deny the charter and to clamp down on stablecoin interest. The OCC will take roughly 12–18 months to review the application, and the dispute also centers on legal challenges to an OCC interpretive letter that crypto firms cite as authority.
Who does this affect?
Directly affected are Coinbase and other crypto companies (like Ripple, Circle and Paxos) pursuing federal charters, whose plans could be delayed or blocked. Community banks and big banks stand to lose deposits and market share if interest-bearing stablecoin products spread, while smaller rural banks warn of disproportionate harm to lending. Consumers, businesses using stablecoins for payments or rewards, and investors in both banks and crypto firms face uncertainty about products, custody services, and regulatory clarity.
Why does this matter?
If regulators side with banks, crypto firms could be kept out of core banking functions, slowing crypto–traditional finance integration and investment in custody and payments infrastructure. Banking groups warn that yield-bearing stablecoins could siphon roughly $1.5 trillion from bank deposits and significantly cut lending capacity, which would pressure small-business and farm credit and ripple through credit markets. The regulatory outcome will shape sector valuations, liquidity and volatility in crypto markets, determine how quickly stablecoins scale, and set compliance costs and competitive dynamics across finance.