US Banks Warn OCC Crypto Charters Could Weaken The Banking System

The US banking industry has mounted a coordinated challenge to the Office of the Comptroller of the Currency’s (OCC) approach. The pushback targets the regulator’s efforts to integrate cryptocurrency firms into the federal banking system.

On December 12, OCC issued conditional approval of national trust charters for five digital asset firms, including Ripple, Fidelity, Paxos, First National Digital Currency Bank, and BitGo. The bank regulator stressed that the crypto applicants underwent the same “rigorous review” as any national bank charter applicant.

US Banking Industry Challenges OCC’s Move

However, the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) argue that the OCC’s actions create a two-tier banking system.

Their central claim is that fintech and crypto firms are being granted prestigious national charters without carrying Federal Deposit Insurance Corp. (FDIC) coverage or meeting traditional capital and liquidity standards required of full-service banks.

The groups contend that this structure encourages what they describe as regulatory arbitrage at the federal level.

By securing a national charter, the crypto firms can benefit from federal preemption of state money transmitter laws. At the same time, they avoid many of the compliance obligations that apply to insured depository institutions.

ABA President Rob Nichols said the approvals “blur the lines” of what constitutes a bank. He further argues that this erosion of definitions risks weakening the integrity of the charter itself.

In his view, expanding trust powers to firms that do not perform traditional fiduciary duties creates a class of institutions that resemble banks in name and scope but lack comparable oversight