US Bank Lobby Challenges Crypto Bank License Bids

The U.S. banking trade groups have officially challenged the attempts made by crypto companies to obtain national bank charters. The leading financial associations have submitted a letter to the Office of the Comptroller of the Currency (OCC) in an effort to urge federal regulators to delay decisions on crypto companies’ applications until further public scrutiny is allowed.

Petition to Delay Crypto Bank Charters

The American Bankers Association and several other banking and credit union groups expressed strong opposition to charter bids from crypto-native firms such as Circle Internet Group, Ripple Labs, and Fidelity Digital Assets. They argued that approving these applications would mark a “fundamental departure” from OCC precedent.

“There are significant policy and legal questions as to whether the Applicants’ proposed business plans involve the types of fiduciary activities performed by national trust banks,” the union stated, raising doubts about the legitimacy and scope of services these crypto firms intend to offer.

If granted, the OCC charters would allow firms like Circle and Ripple to essentially operate as federally regulated banks, handling payments, custody, and other services, without needing state-by-state licenses. However, the banking groups claim that the publicly available portions of the applications are too vague to permit meaningful commentary or public understanding of their operational models.

Fears of Eroding Regulatory Standards

The central concern, as mentioned in the letter, is that these crypto firms may be trying to evade stricter capital requirements and regulatory oversight by acquiring national trust charters, entities traditionally meant for fiduciary duties, such as wealth and estate management.

“Providing custodial services for digital assets is not a fiduciary activity,” the letter asserts. “Granting charters where traditional fiduciary activity is absent, or secondary at best, would represent a significant change in OCC policy.”

The groups argue that if the OCC greenlights such applications, it could pave the way for other non-traditional entities to bypass longstanding financial regulatory norms, posing “material risk to the U.S. banking and financial system.”

Caitlin Long, founder of Custodia Bank, a crypto-focused financial institution, commented on X.com (formerly Twitter) that the move signals a brewing legal conflict. “If what they fear will happen ends up happening, then why wouldn’t banks just convert to trust companies and keep their existing businesses at a small fraction of the capital requirements?” she questioned.

Alexander Grieve, government affairs lead at crypto venture firm Paradigm, highlighted the unusual unity among financial institutions. “Banks and credit unions rarely agree on anything. But they seem to agree that they’re finally about to have some competition from crypto,” he noted.

New Legislation Fuels the Push

The charter applications arrive on the heels of the recently passed GENIUS Act, which provides a regulatory framework for stablecoin issuance. However, the law’s limitations, restricting firms to stablecoin activities only, have led crypto companies to seek broader charters.

Logan Payne, a crypto regulatory attorney, explained that national trust bank charters offer more flexibility. “The OCC charter allows them to engage in stablecoin issuance plus a wider range of activities, but without having to get state-to-state licenses,” he said.

As the country navigates this critical junction, the tension between legacy banks and crypto innovators may shape the next phase of U.S. financial regulation. Whether crypto firms can secure federal charters, and under what conditions, remains a question with wide-ranging implications.