OCC’s April Preliminary Decision Set $60 Million Floor for Coinbase Trust

The Office of the Comptroller of the Currency (OCC) set a $60 million Tier 1 capital minimum for Coinbase National Trust Company in an April 2 preliminary decision that also imposed liquidity safeguards and operating limits.

It authorizes the company to safeguard cryptocurrency for clients while acting in a fiduciary role, subject to the duties and conduct requirements of that role. It limits the company to trust-company operations and related activities in its business plan.

Under the preliminary decision, eligible liquid assets must equal the greater of 50% of Tier 1 capital or $30 million. The decision also calls for quarterly capital and liquidity assessments during the company’s first three years of operation.

A separate pool of eligible liquid assets must cover 180 days of operating expenses. Those assets cannot also count toward the capital-related liquidity buffer. The decision applies this requirement during the first three operating years.

Significant changes to the business plan or operations require at least 60 days’ prior written notice and the OCC’s written non-objection. That condition covers the in-organization period and the first three years of operations.

The OCC approved the application April 2, and Coinbase National Trust Company’s charter became effective Nov. 6. Coinbase announced final approval Nov. 9. Its charter’s effective date and fiduciary custody scope mark separate milestones from the conditions in the April preliminary decision. The capital, liquidity and notice provisions described here are those set out in that preliminary decision.