The US banking industry has mounted a coordinated challenge to the Office of the Comptroller of the Currency’s (OCC) approach. The pushback targets the regulator’s efforts to integrate cryptocurrency firms into the federal banking system.
On December 12, OCC issued conditional approval of national trust charters for five digital asset firms, including Ripple, Fidelity, Paxos, First National Digital Currency Bank, and BitGo. The bank regulator stressed that the crypto applicants underwent the same “rigorous review” as any national bank charter applicant.
US Banking Industry Challenges OCC’s Move
However, the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) argue that the OCC’s actions create a two-tier banking system.
Their central claim is that fintech and crypto firms are being granted prestigious national charters without carrying Federal Deposit Insurance Corp. (FDIC) coverage or meeting traditional capital and liquidity standards required of full-service banks.
The groups contend that this structure encourages what they describe as regulatory arbitrage at the federal level.
By securing a national charter, the crypto firms can benefit from federal preemption of state money transmitter laws. At the same time, they avoid many of the compliance obligations that apply to insured depository institutions.
ABA President Rob Nichols said the approvals “blur the lines” of what constitutes a bank. He further argues that this erosion of definitions risks weakening the integrity of the charter itself.
In his view, expanding trust powers to firms that do not perform traditional fiduciary duties creates a class of institutions that resemble banks in name and scope but lack comparable oversight.
Meanwhile, their concern extends beyond competition.
Banking groups warn that consumers may struggle to distinguish between insured banks and national trust institutions holding large volumes of uninsured crypto assets.
They argue that the OCC has not adequately explained how it would manage the failure of such an entity, particularly if it were holding billions of dollars in digital assets outside the traditional safety net.
ICBA Wants the Charters Halted
The ICBA also directly challenged the OCC’s statutory authority to issue the charters.
The group focused its criticism on Interpretive Letter No. 1176. This guidance enabled trust banks to engage in non-fiduciary activities such as custody of stablecoin reserves.
ICBA President Rebeca Romero Rainey described the move as a “dramatic policy change” that stretches the national trust charter beyond its historical purpose.
“The OCC’s dramatic policy change under Interpretive Letter #1176 is a departure from the role of conventional trust companies and allows for an inconsistent regulatory framework that threatens financial instability — requiring the agency to change course,” Rainey added.
The group argues that the OCC is allowing non-bank fintech firms to effectively borrow the credibility of the US banking system while avoiding the “full scope” of regulations imposed on insured institutions.
Considering this, both trade groups have called for an immediate pause and rescission of the approvals.
They warn that the current framework could produce institutions that the OCC is “not equipped to resolve in an orderly way.” According to them, such a failure could leave traditional banks and the broader financial system exposed.
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