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Coinbase, payments startup consider procurement of bank licenses

Coinbase Inc. and another cryptocurrency firm talked with U.S. regulators about the possibility of procuring banking licenses, in a move that would expand the products they offer, The Wall Street Journal reported, citing a person familiar with the matter.

Coinbase met with officials at the U.S. Office of the Comptroller of the Currency in early 2018, while Ivy Koin LLC, a payments startup, recently talked with Federal Deposit Insurance Corp. officials, according to the source.

The discussions included the firms' business models, however, the companies might not seek a bank charter that could significantly raise more regulatory scrutiny, the report said.

Ivy Koin President Gary Fan said that the company is working with banks rather than trying to become one, but it obtained information about a banking license to understand what might be necessary if it decided to apply.

"Cryptocurrencies are strikingly innovative but also pose challenges associated with speculative dynamics, investor and consumer protections, and money-laundering risks," Lael Brainard, the Federal Reserve Governor, was quoted as saying in a May 15 speech.

Coinbase this week announced new products to hold institutional investors' money in custody, through a partnership with a brokerage regulated by the Securities and Exchange Commission. It also talked to SEC officials in early April about becoming a licensed brokerage firm and electronic trading venue, the Wall Street Journal reported.