The American banking industry has initiated a coordinated challenge against the Office of the Comptroller of the Currency (OCC) its approach. The opposition is directed at the regulator's attempts to integrate crypto companies into the federal banking system.
On December 12, the OCC granted conditional approval of 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 applicants underwent the same 'thorough review' as any applicant for a national bank charter.
The U.S. banking industry challenges the OCC's actions
Nevertheless, the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) believe that the OCC's actions create a two-tier banking system.
Their main claim is that fintech and crypto companies receive prestigious national charters without having Federal Deposit Insurance Corp. (FDIC) coverage or meeting the traditional capital and liquidity requirements that apply to full-service banks.
The groups argue that this structure encourages what they describe as regulatory arbitrage at the federal level.
By securing a national charter, crypto companies can benefit from federal preemption over state money transmission laws. At the same time, they avoid many of the requirements that apply to insured deposit banks.
ABA leader Rob Nichols said that the approvals 'blur the lines' of what constitutes a bank. He further argues that this blurring of definitions could undermine the credibility of the charter itself.
In his opinion, the expansion of trust powers to companies that do not perform traditional management tasks will create a group of institutions resembling banks in name and scope but lacking equivalent oversight.
Their concern extends beyond the competitive aspect.
Banking organizations warn that consumers may have trouble distinguishing between insured banks and national trust institutions handling large amounts of uninsured crypto assets.
They argue that the OCC has not sufficiently explained how it would handle a potential bankruptcy for such an actor, especially regarding how they would manage billions of dollars in digital assets outside the traditional safety net.
ICBA will stop the concessions
ICBA has also challenged the OCC's authority to issue such charters.
The group directed its criticism at Interpretive Letter No. 1176. This guidance allowed trust banks to perform non-management tasks such as holding stablecoin reserves.
ICBA leader Rebeca Romero Rainey described the decision as a 'dramatic policy change' that expands the national trust charter far 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 provides an inconsistent regulatory framework that threatens financial stability — something that requires the agency to change course,' Rainey added.
The group believes that the OCC allows non-bank fintech companies to borrow the credibility of the U.S. banking system while avoiding the 'full scope' of regulation imposed on insured institutions.
Against this backdrop, both interest organizations have called for an immediate pause and overturning of the approvals.
They warn that the current framework could create institutions that the OCC 'is not equipped to handle in an orderly manner.' According to them, such a collapse could expose both traditional banks and the broader financial system.
