In October, cryptocurrency exchange Coinbase submitted an application for a national trust charter in the US, aiming to connect more effectively with traditional financial systems. However, the Independent Community Bankers of America (ICBA) has expressed strong opposition to this move.

In a letter addressed to the US Office of the Comptroller of the Currency (OCC) on Monday, the ICBA highlighted their concerns about the profitability and regulatory scrutiny of cryptocurrency custody. They stated that Coinbase’s subsidiary could face challenges in sustaining profitability, especially during downturns in the crypto market.

Paul Grewal, Coinbase’s chief legal officer, took to X to criticize the ICBA’s stance, arguing:

“Imagine opposing a regulated trust charter because you prefer crypto to stay… unregulated.”

This statement emphasizes the competition between the banking sector and emerging crypto firms, which are seeking recognition and regulatory approval. Grewal further indicated that this was a reflection of banks trying to safeguard their interests against potential threats from digital currencies.

Coinbase’s charter application is part of a broader strategy to integrate the crypto economy with traditional banking systems. The OCC’s review process for Coinbase’s application could take up to 18 months. The ICBA has urged the OCC either to deny the application or allow for substantial public review of the proposed business plan.

Coinbase maintains that its intention is not to transition into a traditional bank but to help bridge the gap between digital and traditional finance. Other crypto companies like Ripple Labs and Circle are also pursuing national bank charters amidst evolving regulations regarding stablecoins.

Cointelegraph was unable to receive immediate feedback from the OCC regarding this matter.