🔥 Key Takeaways
- Coinbase criticizes the use of “reputational risk” as a means to limit crypto banking, labeling it a “political” banking rule.
- The exchange cites FOIA records and related litigation to support its claim that this standard has been used to pressure crypto firms.
- Coinbase advocates for the removal of this standard and a full ban on similar concepts as regulators review bank restrictions from 2020 to 2023 in the U.S.
Coinbase Challenges “Reputational Risk” as a Means to Limit Crypto Banking
Coinbase, a leading cryptocurrency exchange, has expressed its disappointment with the use of “reputational risk” as a criterion to limit lawful crypto banking. The company argues that this standard has been employed to pressure crypto firms and stifle innovation in the industry. In a statement to the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), Coinbase cited Freedom of Information Act (FOIA) records and related litigation to substantiate its claims.
The “Political” Banking Rule
According to Coinbase, the “reputational risk” standard has been used as a pretext to deny crypto firms access to banking services, effectively limiting their ability to operate. The exchange believes that this rule is “political” in nature, as it is not based on objective risk assessments but rather on subjective judgments about the crypto industry. By labeling this standard as “political,” Coinbase is implying that it is being used as a tool to exert pressure on crypto firms and suppress their growth.
Regulatory Review and the Future of Crypto Banking
As regulators review bank restrictions from 2020 to 2023 in the U.S., Coinbase is advocating for the removal of the “reputational risk” standard and a full ban on similar concepts. The exchange believes that this would help to create a more level playing field for crypto firms and allow them to access banking services without undue restrictions. The outcome of this review will be closely watched by the crypto industry, as it could have significant implications for the future of crypto banking and the growth of the sector as a whole.
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