July 22 (Reuters) - PNC Bank is working with

cryptocurrency exchange Coinbase to offer crypto

trading to the bank's customers, the companies said on Tuesday,

in a sign that crypto is moving toward becoming increasingly

interconnected to mainstream finance.

PNC will use Coinbase's institutional "crypto-as-a-service"

platform to develop an offering that will allow PNC clients to

buy, hold and sell cryptocurrencies. The Pittsburgh-based

financial institution will also offer certain banking services

to Coinbase.

WHY IT'S IMPORTANT

The PNC-Coinbase partnership is a stark shift for the

banking sector, which crypto companies at one point had accused

of being hostile to their industry.

Lawmakers earlier this year held a hearing to scrutinize U.S.

banks and their regulators in response to claims they deny

services to particular industries.

Republicans and Democrats agreed that banks may be

improperly denying services to some clients, but disagreed on

the root cause.

The banking industry has fiercely resisted accusations it

denies services based on ideological reasons. It has instead

argued that onerous, outdated and opaque rules make it difficult

for banks to sometimes provide services, or explain why they

cannot.

CONTEXT

The partnership announcement comes as U.S. President Donald

Trump and his administration have embraced cryptocurrencies and

enacted industry-friendly policies.

Trump signed a law on Friday to create a regulatory regime for

dollar-pegged cryptocurrencies known as stablecoins, a major

milestone for the digital asset sector, which has long lobbied

for such a framework. Several banks including Bank of America ( BAC )

and Citibank have said that they are exploring issuing their own

stablecoins.

KEY QUOTE

"Partnering with Coinbase accelerates our ability to bring

innovative, crypto financial solutions to our clients," William

Demchak, PNC CEO, said in a statement. "This collaboration

enables us to meet growing demand for secure and streamlined

access to digital assets on PNC's trusted platform."