Coinbase and Paradigm leaders have accused powerful US banking groups of trying to block innovation in crypto and stablecoins through “protectionist” policies.
The clash reflects deep divisions between traditional finance (TradFi) and digital asset firms, which seek regulatory clarity.
Coinbase Accuses Bank Lobby of “Protectionism”
The Coinbase exchange’s Chief Legal Officer, Paul Grewal, criticized the Independent Community Bankers of America (ICBA) after it urged the Office of the Comptroller of the Currency (OCC) to deny Coinbase’s trust bank charter.
“Imagine opposing a regulated trust charter because you prefer crypto to stay unregulated. That’s ICBA’s position…another case of bank lobbyists trying to dig regulatory moats to protect their own,” Grewal said on X.
The ICBA claimed Coinbase’s application fails to meet statutory chartering standards and could set a dangerous precedent for the structure of the US banking system.
ICBA urged the @USOCC to deny Coinbase’s application for a national trust bank charter for its subsidiary, Coinbase National Trust Co.
The application fails to meet statutory chartering standards and would set a dangerous precedent for the structure of the U.S. banking system.…
— Independent Community Bankers of America (@ICBA) November 4, 2025
Coinbase’s Chief Policy Officer Faryar Shirzad also fired back, linking the controversy to the broader debate over stablecoins. He pointed to the GENIUS Act, which aims to regulate dollar-backed stablecoins under the oversight of the OCC.
“Stablecoins are a breakthrough in payments technology…faster, cheaper, and safer. The GENIUS Act gives us clear rules: 1:1 backing, par redemption, and 24/7 supervision,” Shirzad wrote.
He said many Bank Policy Institute (BPI) member banks are already adopting stablecoins, and efforts to protect last century’s payment systems will ultimately fail.
Paradigm: “If You Can’t Beat Them, Destroy Them”
Elsewhere, Alexander Grieve, VP of Government Affairs at Paradigm, accused the Bank Policy Institute of using “bad-faith” arguments against stablecoins.
“The BPI seems to have taken the ‘if you can’t beat them, destroy them’ approach,” Grieve said.
Comparing stablecoins to innovations like ETFs and Velcro, he argued that new technologies often evolve beyond their original purpose.
Grieve also suggested that former SEC Chair Gary Gensler’s allies may be influencing anti-crypto sentiment at BPI. He described their tactics as “antiquated political agendas.”
Bank Groups Warn of Financial Stability Risks
In a recent post, the Bank Policy Institute warned that integrating stablecoins into the TradFi system without “full safeguards” could allow crypto market shocks to spill into the broader economy. The group also highlighted gaps in illicit finance risk management.
If stablecoins become more integrated into the traditional financial system without full safeguards, crypto market shocks could infect the broader economy for the first time. Read the latest from BPI: https://t.co/boQL7TutWm
— Bank Policy Institute (@bankpolicy) November 3, 2025
The OCC’s decision on Coinbase’s national trust bank charter will signal how far US regulators are willing to go in integrating crypto firms into the banking system.
Meanwhile, the GENIUS Act could become a pivotal framework for stablecoin oversight if it gains traction in Congress.
As digital payments and tokenized assets expand, the power struggle between crypto innovators and traditional banks is set to intensify. Undoubtedly, this will shape the next era of US financial regulation.
The post Coinbase and Paradigm Say Banks Are Trying to Block Stablecoin Innovation appeared first on BeInCrypto.
