Coinbase Trying to Become a Bank? Good or Bad for Bitcoin?

[Botnake]

So Coinbase just applied for something called a National Trust Charter in the US. Basically, it’s like getting permission to act more like a bank so they can mix crypto with traditional finance. [ https://news.bitcoin.com/coinbase-files-for-national-trust-charter-to-bridge-crypto-and-traditional-finance/ ]

Sounds big, but here’s the thing... Bitcoin was created so we don’t need banks in the first place. If exchanges like Coinbase start becoming bank-like, isn’t that kinda against what Bitcoin stands for?

My questions:

Does this really help Bitcoin adoption, or does it just make people depend more on centralized companies?

Are we slowly going back to the same banking system we wanted to escape?

Curious what you guys think, is this a step forward or just another trap?

[adaseb]

I think this is mostly to get more market exposure and nothing else. In Canada there is a stock brokerage called Wealth Simple which is pretty much the same thing. You can use it as a bank to pay your bills and keep your money, use it to sell stocks and they even feature crypto.

One way they get more business and more revenue by getting more trading fees if they want you to deposit your pay roll into them. Once you deposit with them, its a click or two away from making a trade and investing that money and they will get more commissions that way. Plus the user is satifed because these banks are typically free and no monthly fees like most brick and mortar banks out there.

[BitGoba]

You are right Bitcoin is a monetary system designed to work without banks, allowing everyone to essentially be their own bank. Today, banks still exist because gold and silver were not practical as everyday money, and they have been around for several hundred years.In return, they issued paper banknotes that represented the amount of metal you had deposited. These banknotes could then be used in everyday transactions as a medium of exchange instead of physically carrying gold or silver. Essentially, the bank promised that anyone holding a banknote could redeem it for the equivalent amount of gold or silver. Over time, people became convinced that they shouldnt hold their own money, and that banks should do it for them.

We cannot forbid anyone from using Bitcoin bank. Everyone is free to make their own decisions. However, if it becomes a widespread phenomenon, it could threaten to repeat what happened with gold.Bitcoin is a much better form of money. Banks don’t make much sense on the Bitcoin Standard because you can easily store it and transfer it. Unlike gold, imagine having to carry or transfer a million dollars’ worth of gold  it would be extremely impractical.Under the Bitcoin standard, banks arent necessary, but it requires education and a break from traditional financial habits

[NotATether]

Users are not going to be opening bank accounts with coinbase. Why on earth would I want to wait an hour to create a wallet that normally takes a minute or two only?

I suspect that this application is not intended for the regular consumers. It is probably meant for their larger, million-dollar customers who have additional storage requirements.

[free-bit.co.in]

If exchanges like Coinbase start becoming bank-like, isn’t that kinda against what Bitcoin stands for?



Does this really help Bitcoin adoption, or does it just make people depend more on centralized companies?

Even if Coinbase doesn't become a bank, they will still be a centralized entity and provide centralized services. They’ve already gone against what Bitcoin was originally created for and what it has represented since the very beginning.
So whether they become banks or remain centralized exchanges makes little difference.

Are we slowly going back to the same banking system we wanted to escape?

Are there any bitcoin investors who don't have a bank account and don't use banks? My guess NO, and we have never once escaped the banking system. We still depend on them and things remain the same because we only consider bitcoin as an investment asset and not use it for its original purpose.

[Lucius]

~snip~
Even if Coinbase doesn't become a bank, they will still be a centralized entity and provide centralized services. They’ve already gone against what Bitcoin was originally created for and what it has represented since the very beginning.
So whether they become banks or remain centralized exchanges makes little difference.

As long as there are private and business users who need their services (cryptocurrency trading and custodial service), they will provide it. It is logical that such companies are always looking for a way to enable some new services and thereby enable themselves more new clients and higher earnings, and I don't see any problem with that.

In addition, many who keep their cryptocurrencies with them consider them a crypto bank, so the name itself is completely irrelevant.

[kotajikikox]

So Coinbase just applied for something called a National Trust Charter in the US. Basically, it’s like getting permission to act more like a bank so they can mix crypto with traditional finance. [ https://news.bitcoin.com/coinbase-files-for-national-trust-charter-to-bridge-crypto-and-traditional-finance/ ]

Sounds big, but here’s the thing... Bitcoin was created so we don’t need banks in the first place. If exchanges like Coinbase start becoming bank-like, isn’t that kinda against what Bitcoin stands for?

This will only mean one thing. Investors or traders would not use coinbase anymore if the platform no longer fits what they need. There are still a lot of exchanges out there that only focuses on bitcoin or crypto and one that doesn't cater to traditional fiat.

Are we slowly going back to the same banking system we wanted to escape?

Curious what you guys think, is this a step forward or just another trap?

I don't think so and I hope not. A lot of people has been now awaken and now aware of the faults of the traditional system. A lot of people now care more about their privacy so they now think of that.

[yhiaali3]

I don't think it conflicts with the principle of Bitcoin, because Coinbase doesn't represent Bitcoin. It's simply a centralized platform that uses Bitcoin, just as it uses cryptocurrencies and stablecoins. Ultimately, it's a just profit company seeking new ways to expand its reach and increase profits.

Bitcoin is completely decentralized and cannot be tied to any platform, entity, institution, or government. What would it mean if Coinbase turned into a bank? This is absolutely nothing and will not affect Bitcoin's decentralized concept.

[Takyeon]

Right from day one CoinBase has always feel more like a bank than a crypto exchange, they pulled a stunt on coins holders some years ago where every other altcoins were pumping to ATH and they claimed that their exchange is on upgrade, this was how many investors was unable to take profits, and guess what? the upgrade never get done until days later.

I  as a person will never use CoinBase for any reasons, either bank like or exchange like, i don't care, i have given up on them since they pulled that stunt on all crypto investors, there is nothing as diabolical than this, i am one of the few that learnt a lesson from this sad event and i know that many already let go, that is why coinbase is still standing, i don't need to advise people not to keep coins or bitcoin on the exchange, everyone has their decisons to make and some with later learn from it.

Not your keys? Definitely not your coins.

[Satofan44]

Sounds big, but here’s the thing... Bitcoin was created so we don’t need banks in the first place. If exchanges like Coinbase start becoming bank-like, isn’t that kinda against what Bitcoin stands for?

You like most people here never understood some basics. Every exchange is the crypto equivalent of a bank. If you are using an exchange to store coins you are not using Bitcoin at all.

Does this really help Bitcoin adoption, or does it just make people depend more on centralized companies?

This is a good move in any case. A pseudo bank becoming more of a formal bank is always better, never worse.

Right from day one CoinBase has always feel more like a bank than a crypto exchange, they pulled a stunt on coins holders some years ago where every other altcoins were pumping to ATH and they claimed that their exchange is on upgrade, this was how many investors was unable to take profits, and guess what? the upgrade never get done until days later.

It is the same for all exchanges in principle, some operational details may differ.

Not your keys? Definitely not your coins.

It is funny because most respondents in this forum are supplying addresses from exchanges or are directly sending to exchanges after receiving their signature payment.  

[Botnake]

Users are not going to be opening bank accounts with coinbase. Why on earth would I want to wait an hour to create a wallet that normally takes a minute or two only?

I suspect that this application is not intended for the regular consumers. It is probably meant for their larger, million-dollar customers who have additional storage requirements.

They want to operate like a trust company that can hold Bitcoin for institutions and individuals. If their application for a National Trust Charter gets approved, it would give them more credibility since they’ll be more recognized. And I think the main reason is that being “national” means they won’t have to apply for a separate permit in every US state once it’s approved.

[retaur]

It's a good way to get more integration with traditional finance imo.

I think Coinbase was founded by a crypto enthusiast that saw a need for it in 2013 and it's become one of the biggest crypto organisations to exist.

Integrating crypto with traditional finance is a start to getting crypto to overtake it. Not everyone's using Bitcoin and the more people with exposure to serviced that enable it, the more it's going to make them consider getting some.

[notocactus]

So Coinbase just applied for something called a National Trust Charter in the US. Basically, it’s like getting permission to act more like a bank so they can mix crypto with traditional finance.

Does this really help Bitcoin adoption, or does it just make people depend more on centralized companies?

Are we slowly going back to the same banking system we wanted to escape?

Curious what you guys think, is this a step forward or just another trap?

Let's wait what they will achieve in the future but for now, you can see that many Bitcoin Spot ETFs in the USA chose Coinbase as their custodian. This is very big risk and you don't have to wait for approval of Coinbase National Trust Charter in the US to see risk from Coinbase.

They are a big cryptocurrency company from the USA so it makes sense that many Bitcoin Spot ETFs chose Coinbase as custodian service provider, however having too centralization into Coinbase is bad and very risky.

Visit https://blockworks.com/analytics/bitcoin-etf/tracker and pay your attention on Custodian column to see how domination Coinbase is.

[pooya87]

I think you'll have to understand the law at a technical level to say that this means but what I can say is that Coinbase by nature was like a bank considering the users had no control over their own keys and fully gave up that control to the Coinbase just like when you use a bank!

Are we slowly going back to the same banking system we wanted to escape?

No. We aren't going back to anything because we can and will continue using Bitcoin the way anybody should (not your keys, not your coins). The users of Coinbase who didn't have any control, will continue not having any control over their own money.

[cr1776]

As long as there needs to be an on-ramp and off-ramp to bitcoin, exchanges are necessary.  Whenever we hit equilibrium with fiat (perhaps a few more orders of magnitude) then there will be no need to get in and out of fiat and one could transact in bitcoin.  Kind of like some people have been doing for 15+ years.  It is like if you had to exchange Euros for dollars to buy groceries, it would be a royal pain, particularly if you had to pay capital gains taxes on the transaction.  So in the short term it seems perfectly fine because someone has to be able to be a money changer.

[OcTradism]

As long as there needs to be an on-ramp and off-ramp to bitcoin, exchanges are necessary.  Whenever we hit equilibrium with fiat (perhaps a few more orders of magnitude) then there will be no need to get in and out of fiat and one could transact in bitcoin.  Kind of like some people have been doing for 15+ years.  It is like if you had to exchange Euros for dollars to buy groceries, it would be a royal pain, particularly if you had to pay capital gains taxes on the transaction.  So in the short term it seems perfectly fine because someone has to be able to be a money changer.

Not only capital gain tax when you make a transaction and sell your coins, but there are some nations and governments have proposed to tax your coins even you only hold them in your portfolios and wallets.

Governments seem to be super greedy and they don't want to cap their tax budget that is gained from their citizens. More laws, regulations will be proposed, passed and enforced for helping governments collecting more money from tax in their nations. Citizens will have to pay more tax if they can not fight against and veto such unreasonable tax policies that are only in proposals now.

[Zaguru12]

I think you'll have to understand the law at a technical level to say that this means but what I can say is that Coinbase by nature was like a bank considering the users had no control over their own keys and fully gave up that control to the Coinbase just like when you use a bank!

The question isn’t all centralized exchanges and those platforms that ask for KYC already banks in cryptocurrency because to me there is nothing different yet from them just some slight policy difference between them and fiat or traditional banks and this policies would soon be added as they push for more government regulations and that’s exactly what Coinbase is super heading, they simply want their customers to trust them and leave their coins with them and it’s the reason why many of this exchanges are now having proof of reserve.

Like you think righty said this doesn’t change the nature of bitcoin which is that it is pseudonymous and you can use it the way you like, if want the complete freedom be your own bank is the way and it will never be tempered With no matter the centralization of this platforms.

[Webutxo]

Not only capital gain tax when you make a transaction and sell your coins, but there are some nations and governments have proposed to tax your coins even you only hold them in your portfolios and wallets.

Governments seem to be super greedy and they don't want to cap their tax budget that is gained from their citizens. More laws, regulations will be proposed, passed and enforced for helping governments collecting more money from tax in their nations. Citizens will have to pay more tax if they can not fight against and veto such unreasonable tax policies that are only in proposals now.

Taking tax from coins on a wallet that hasn't been sold is not taxation but extortion. I'm not so sure if there is any developed nation that tax this way. Usually, when you have an asset, they don't tax it even if you have profit on it but when you sell it, that's when you pay tax for the capital gain(the profit) but if you make loss(capital loss), they don't ask for tax. However, some do ask for capital loss in small amount and will be tax in the future capital gain, not immediately.

Tax isn't slavery, when it becomes excess, it makes investors to run away from the country.

[OgNasty]

Hopefully it leads to them paying interest on Bitcoin deposits.

[Rustam Meraj]

Main argument surrounding Coinbase receiving National Trust Charter is whether it is beneficial to Bitcoin because it makes it easier to use by all or it is betrayal of initial concept of Bitcoin to not use banks and centralization. On one hand proponents argue that charter is much needed step in right direction since it provides large corporations and general population with clarity and trust required to massively adopt it making it easier and quicker to buy and sell crypto. Conversely critics fear this is trap that will result in return to old regulated banking system and that federally regulated company such as Coinbase will become powerful centralized gatekeeper who can control assets which is last thing Bitcoin is supposed to be and this move is difficult trade off that sacrifices pure decentralization in favor of wider and easier adoption.