Tensions are rising between the Independent Community Bankers of America (ICBA) and crypto firms Coinbase and Paradigm after the ICBA urged the Office of the Comptroller of the Currency (OCC) to reject Coinbase’s application for a national trust bank charter, arguing that the exchange fails to meet regulatory standards.

In a letter published in November, the ICBA opposed the charter on “multiple independent grounds,” claiming the proposal does not align with the OCC’s regulatory framework.

The association outlined three key concerns. First, it argued that Coinbase’s National Trust Charter (CNTC) relies on “flawed risk and control functions” and operates under a governance structure that prevents independent oversight.

The ICBA also argued that CNTC’s narrow focus on digital asset custody could leave it vulnerable during prolonged market downturns. It further warned that the OCC’s untested receivership framework may struggle to manage an uninsured institution of CNTC’s size and complexity.

The ICBA further requested that the OCC either deny the application outright or release redacted versions of CNTC’s confidential business plan and legal analysis. It also called for an extended public comment period and a hearing to review the application’s legal, prudential, and public interest implications.

Coinbase and Paradigm Push Back

The letter sparked strong reactions from Coinbase and Paradigm executives, who described the ICBA’s stance as a protectionist move by banking lobbyists.

Paul Grewal, Coinbase’s Chief Legal Officer, said the ICBA’s opposition reflects a preference for keeping crypto unregulated. He criticized the move as “another case of bank lobbyists trying to dig regulatory moats to protect their own,” adding, “From undoing laws to blocking charters, protectionism isn’t consumer protection.”

Alexander Grieve, Paradigm’s Head of Policy, also condemned the letter, calling it “a bad-faith and narrow-minded characterization” of crypto innovation. He argued that groups like the Bank Policy Institute (BPI) have adopted an “if you can’t beat them, destroy them” approach toward the industry.

Grieve went on to note that many transformative inventions—such as Velcro, zippers, bubble wrap, and ETFs—were repurposed beyond their original intent. Similarly, he said, stablecoins began as tools for maintaining on-chain price stability but have since evolved, particularly under the GENIUS Act, into powerful instruments for global payments.

He added that several of former SEC Chair Gary Gensler’s allies appear to be influencing policy discussions at BPI, continuing what he described as “old grudges and outdated political agendas” against crypto. “Perhaps they should speak with their member banks,” he said, “many of which are already working with or exploring their own stablecoins.”

Coinbase Applauds Openness to Stablecoin Innovation

In contrast, Faryar Shirzad, Coinbase’s Chief Policy Officer, commended BPI’s willingness to engage with stablecoin innovation and praised the GENIUS Act as a positive step forward.

“Many of BPI’s member banks are doing great work adopting stablecoins,” Shirzad said. “BPI’s efforts to protect last century’s payment technology won’t succeed, especially as its own members move ahead.”