You Won’t Believe What Coinbase Said to US Regulators! 😱

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Cryptocurrency exchange Coinbase, in all its splendid audacity, decided it was time to poke the great bear that is the US regulators. They sent a letter urging them to kindly confirm that banks are indeed free to dance with the crypto businesses. And why not? Everyone loves a good waltz with digital assets, right? 💃

According to our ever-reliable sources with magnifying glasses, Coinbase sent this epistolary gem to the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board of Governors, and the Federal Deposit Insurance Corporation (FDIC). The letter sought divine clarity on the banking services status to crypto, or as we like to call it, “Operation Crypto Custody.”

In their missive, Coinbase asked the OCC to rescind an interpretive letter that they claim imposes a “de facto application process for novel bank activities” and bars banks from entering the crypto asset market. Such drama! It’s like a plot twist in a Gogolian tale where the humble postmaster suddenly dreams of becoming a knight. 🏇

The plucky US-based exchange didn’t stop there. They pleaded with the Fed and FDIC to affirm that state-chartered banks could indeed provide and outsource crypto custody and execution. Imagine the puffs of attorney wigs in consternation! 🎩

A Kafkaesque Plea for Banking Freedom

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According to Bloomberg, three law firms were meticulously retained by Coinbase to opine that current federal laws already grant banks the sacred permission to provide crypto services and collaborate with third-party service providers like Coinbase. A trifecta of legal wisdom! 🤓

Yet, Coinbase insists, the banking regulators must confirm this to be true. It’s rather like needing the Tsar’s personal endorsement to sell piroshki in the marketplace. The firms, for those who enjoy legal theater, were Arnold and Porter Kaye Scholer, Cleary Gottlieb Steen and Hamilton, and the grandiloquently named Wilmer Cutler Pickering Hale and Dorr.

“It’s crucial for regulators to clarify that banks can work with third-party providers in providing trading and exchange services to their customers,” proclaimed Coinbase chief policy officer Faryar Shirzad. And indeed, without such clarity, the ballet of crypto services can’t possibly commence. 👯‍

FDIC & The Great Crypto Crescendo 🎶

The FDIC has been causing quite a stir. It seems they asked several US banks to pause their crypto activities, rather like a maestro stopping the orchestra in mid-performance.

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In June 2024, Coinbase took to the grand stage and filed lawsuits against the US Securities and Exchange Commission and the FDIC, alleging that these agencies orchestrated a “coordinated attempt to cut off digital-asset firms from essential banking services.” Talk about taking a stand with a dramatic flourish! 💥

In this riveting legal saga, Coinbase’s chief legal officer Paul Grewal restated in January 2025 that the FDIC had craftily omitted some “pause letters” related to crypto in a Freedom of Information Act lawsuit. One almost imagines the FDIC twirling its mustache behind the curtains. 😼

With US President Donald Trump now in office as of Jan. 20, the crypto community holds its collective breath, hoping for positive changes in the US crypto ecosystem. It’s like waiting for the jester to become the king. 👑

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Indeed, Coinbase, ever the diligent suitor to the Trump administration, saw the presidential victory as a gust of fresh wind for crypto and economic liberty. Their push to cement banking support for crypto custody and execution marks a substantial development. This move, especially as Coinbase serves custody for many US Bitcoin exchange-traded funds that began trading last year, underscores their determination to navigate the banking labyrinth.

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2025-02-04 16:30