The banking sector in the U.S. is collectively opposing the Office of the Comptroller of the Currency's (OCC) approach to integrating cryptocurrency companies into the federal banking system! The focus of the discussion is the concerns regarding the OCC's approaches to crypto firms.
On December 12, the OCC granted conditional national trust charters to five digital asset companies, including Ripple, Fidelity, Paxos, First National Digital Currency Bank, and BitGo. The bank regulator emphasized that crypto applications underwent a 'rigorous review,' just like every national bank charter.
U.S. Banking Sector Opposes OCC Move
However, the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) argue that the OCC's actions create a dual-layer banking system.
They claim that fintech and crypto companies gain an advantage in the market while obtaining privileged national licenses without complying with Federal Deposit Insurance Corporation (FDIC) coverage and traditional bank capital and liquidity requirements.
This structure, they say, encourages regulatory arbitrage at the federal level.
When obtaining a national bank license, crypto companies are exempt from state-level payment license laws, but they also avoid many compliance obligations applied to insured deposit institutions.
In his statement, ABA President Rob Nichols said that the approvals 'blur the boundaries of the banking concept.' He noted that the erosion of these definitions poses a risk to the integrity of the license.
According to Nichols, granting trust authority to companies that do not provide traditional fiduciary services creates a class of institutions that resemble banks in name and function but are not subject to the same oversight mechanisms.
These concerns are not limited to competition.
Banking groups state that consumers may have difficulty distinguishing national trust institutions holding large amounts of uninsured crypto assets from insured banks.
They argue that the OCC has not clearly outlined how it would proceed if such an institution were to fail—especially if billions of dollars in digital assets were left outside of the traditional safety net.
ICBA Wants Licenses Suspended
ICBA also directly questioned the OCC's authority to grant these licenses.
ICBA specifically directed its criticism at Comment Letter No. 1176. This guidance allowed trust banks to engage in activities excluded from traditional fiduciary scope, such as holding stablecoin reserves.
ICBA President Rebeca Romero Rainey described this step as a 'radical policy change that goes beyond the historical purpose of the international trust license.'
Rebeca Romero Rainey stated: The radical policy change made by the OCC under Comment Letter #1176 is a departure from traditional trust companies and leads to an inconsistent regulatory framework that threatens financial stability: The agency needs to abandon this policy.
According to the ICBA, the OCC is allowing non-bank fintech companies to operate within the reputation of the U.S. banking system by bypassing regulations applied to insured institutions.
In light of these developments, both business associations called for the immediate suspension and withdrawal of the approvals.
They warn that the current framework may lead to the emergence of 'institutional structures that the OCC cannot regularly resolve.' Such a scenario could put traditional banks and the broader financial system at risk.
