Coinbase Transforms into a Crypto Bank: Considering Application for U.S. Banking License While Advancing New Stablecoin Legislation

04/24/2025

Coinbase Considers Applying for U.S. Federal Banking License, Aiming to Transform into a Bank

Coinbase is currently “actively considering” applying for a U.S. federal banking license, though no formal decision has been made yet. This news aligns with recent reports that several other cryptocurrency firms, including Circle, Paxos, and BitGo, are also contemplating similar “transformations.”

With a banking license, cryptocurrency firms could operate like traditional banks, allowing them to “raise deposits and make loans.” However, they would also be subject to federal-level financial regulations and reporting requirements. For instance, Anchorage Digital, a digital asset bank already holding a banking license, is under scrutiny by the U.S. Department of Homeland Security’s “Money Laundering and Financial Crimes Task Force,” indicating that the path to transformation remains bumpy.

Paxos Obtained Preliminary Approval Back in 2021, Circle Following Suit

In fact, back in 2021, the Office of the Comptroller of the Currency (OCC) had provisionally approved Paxos’ banking license application. According to the Wall Street Journal, Circle is also interested in applying for a U.S. federal banking license. With Federal Reserve Chairman Jerome Powell recently stating that “stablecoins need a legal framework,” the overall atmosphere is moving towards greater openness. This shift in sentiment has led many cryptocurrency firms to believe that “now is the best time to apply.”

Two Legislative Tracks Underway! A Comparison of the STABLE and GENIUS Acts

The U.S. Congress is currently advancing two pieces of legislation related to stablecoins, namely:

Stablecoin Transparency and Accountability Act (STABLE Act)
U.S. Stablecoin Innovation and Advancement Act (GENIUS Act)

Key Points of the STABLE Act:

Supported by Republicans, advocating for enhanced federal regulation.
Requires separation of stablecoin reserves and operating funds.
Prohibits the use of “self-issued digital assets” as collateral for issuing stablecoins, with a two-year ban in place.

Key Points of the GENIUS Act:

Takes a more flexible approach, balancing federal and state-level management.
Defines stablecoin issuers as “financial institutions.”
Enhances anti-money laundering (AML), liquidity, and sanctions reviews.
One of its goals is to strengthen the dollar’s dominance in the global payment system.

Both bills are still in the legislative process, with the STABLE Act having just passed the House Financial Services Committee, while the GENIUS Act was approved by the Senate Banking Committee in mid-March.

Additional Funding Channels for Institutions and Firms, Adding a New Window for Capital Raising

If cryptocurrency banks could accept crypto assets as collateral, they could:

Provide “crypto asset financing” for Web3, startups, and even traditional enterprises.
Facilitate cross-border lending without going through the SWIFT system, potentially faster and cheaper.
If combined with stablecoins (like USDC), it would effectively create a “parallel banking system for dollars.”

In the long run, this could be a significant turning point for promoting stability and compliance in the cryptocurrency market. However, cryptocurrencies, to some extent, represent a rejection of traditional banking practices, designed specifically for “decentralization.” Perhaps this does not signify a renunciation of cryptocurrency ideals, but rather a choice to penetrate the core financial system through legal and compliant means, rewriting the rules from within.

Risk Warning

Investing in cryptocurrencies carries a high level of risk, and their prices can be highly volatile. You may lose your entire principal. Please carefully assess the risks.