In a move that highlights the increasing tension between the traditional financial system and the booming digital asset sector, the Independent Community Bankers of America (ICBA) has officially requested regulators to block the effort to obtain a national trust charter by #SonyBank . Sony's goal is to establish Connectia Trust, a subsidiary aimed at issuing a dollar-pegged stablecoin, managing reserve assets, and providing digital asset custody services. For the ICBA, which represents small banks nationwide, this move by the Japanese financial giant is seen as an exploitation of legal loopholes, allowing them to gain the benefits of a U.S. banking license without fully complying with strict supervisory regulations.
The ICBA sent a letter to the Office of the Comptroller of the Currency (OCC) last week, warning that Sony Bank's application is "an unacceptable reinterpretation" of federal law. The organization is concerned that if approved, this model could create confusion and harm consumers in the event of a financial crisis or insolvency. Their core concern revolves around the nature of the stablecoin that Connectia Trust intends to issue. Although digital assets, the ICBA points out that these stablecoins "share many characteristics with bank deposits," including the ability for electronic transfers, point-of-sale spending, and 1:1 conversion to dollars.
According to the ICBA's argument, Connectia's issuance of assets featuring characteristics similar to deposits while evading two critical legal requirements, namely federal deposit insurance (FDIC) and the Community Reinvestment Act (CRA), is unfair and dangerous. The CRA requires traditional banks to meet the credit needs of the entire community, including low-income areas. The exemption from these requirements, according to Mickey Marshall, vice president and legal advisor of the ICBA, indicates that Sony Bank's approach seems designed to "gain the benefits of a U.S. banking license without being subjected to the full scope of U.S. banking regulation."
This debate has intensified as the stablecoin market has surpassed $311 billion following the passage of the GENIUS Act in July. Sony Bank is not the only entity pursuing this path; a number of major crypto companies such as Coinbase, Circle, Ripple, Crypto.com, and Paxos are also seeking similar federal licenses.
#ICBA also raises the question of whether Connectia is actually eligible for an exemption under the Bank Holding Company Act, which is only intended for organizations operating "solely in a fiduciary capacity or trust." They note that trust banks would lose their exemption if they allow deposits to be withdrawn "by check or similar means to pay third parties." Connectia's plan to engage in "banking business and ancillary activities permitted for a national bank" appears to be "foundational for issuing debit cards," which could violate statutory restrictions.
Furthermore, the ICBA expressed deep concerns about the OCC's ability to handle a complex collapse related to crypto, especially since the agency has not dealt with any uninsured national banks since 1933. They warned that "a single error in assembling or moving critical systems could lead to the permanent loss of access to billions of customers' assets."
However, proponents of innovation dismiss these concerns. Kadan Stadelmann, Chief Technology Officer of Komodo Platform, asserts that the banking group's concerns are merely "exaggerated and driven by the interests of large banks." He argues that the risks to consumers from stablecoins are being overstated in the name of the "protectionism" of large banks aimed at maintaining dominance in the Western financial system. Stadelmann contends that stablecoins help decentralize currency, serve the unbanked population, and could even "mitigate the risk of bank runs" through transparency on the blockchain. This debate is forcing regulators to balance promoting innovation with reinforcing long-standing consumer protection barriers.
