The American banking industry has collectively protested against the Office of the Comptroller of the Currency (OCC). The banks criticize the regulator for attempting to include cryptocurrency companies in the federal banking system.
OCC granted conditional approval on December 12 for national trust charters for five digital asset companies. They include Ripple, Fidelity, Paxos, First National Digital Currency Bank, and BitGo. The agency emphasized that the crypto applications underwent the same 'thorough review' as all other applying banks.
The US banking sector questions OCC's decision
But the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) argue that OCC's decision creates a two-tier banking system.
The main objections are that fintech and crypto companies receive national licenses without having Federal Deposit Insurance Corp. (FDIC) protection or meeting common capital and liquidity requirements like other banks.
The groups argue that this solution benefits what they call "regulatory arbitrage" at the federal level.
Crypto companies can benefit from national licenses by avoiding state regulations for money transmission. At the same time, they often avoid many of the regulations that apply to banks with deposit security.
ABA's chair Rob Nichols states that these approvals "blur the lines" of what constitutes a bank. He also argues that it could weaken the very meaning of the license.
He believes that by granting trust rights to companies that do not have traditional trust responsibilities, new players are being created. These resemble banks in name and function but lack the same oversight.
The banks' concerns are not just about competition.
They warn that customers may have difficulty distinguishing between banks with deposit insurance and national trust companies that handle large volumes of unprotected crypto assets.
They believe that OCC has not clearly explained how the agency will handle a situation if such a company fails, especially if it involves large amounts of digital assets outside the usual safety net.
ICBA wants to stop the licenses
ICBA questions directly whether OCC has the legal right to issue such licenses.
The group focuses its criticism on Interpretive Letter No. 1176. This document allowed trust banks to engage in other activities than traditional trust responsibilities. For example, to hold stablecoin reserves.
ICBA's chair Rebeca Romero Rainey described this as a "dramatic policy change" that makes trust licenses broader than they have been previously.
"OCC's dramatic policy change according to Interpretive Letter #1176 differs from ordinary trust companies. It creates an inconsistent regulatory framework that threatens financial stability — therefore, the agency needs to change course," says Rainey.
The group argues that OCC allows fintech companies without bank licenses to use the trust of the American banking system. At the same time, they avoid following the full regulations that apply to banks with insurance protection.
Both groups therefore want the approvals to be immediately paused and withdrawn.
They warn that today's system may create companies that OCC cannot wind down in an orderly manner. If such a company fails, traditional banks and the financial system may be at risk.
