- US banking groups want the OCC to delay crypto firms’ bids for national bank licenses.
- They argue firms like Ripple and Circle lack fiduciary activities required by trust banks.
- Crypto firms seek national trust charters to bypass state rules and expand payment services.
Traditional banks in the U.S. are pushing back hard against crypto firms entering their territory. This week, major U.S. banking and credit union trade groups called on the Office of the Comptroller of the Currency (OCC) to pause licensing decisions for crypto companies. These firms, including Ripple, Circle, and Fidelity Digital Assets, are seeking national trust bank charters that would let them operate like traditional banks. If approved, these charters would allow crypto firms to settle payments faster, bypass state-level regulations, and offer core banking services.
Traditional Banks Sound The Alarm
The American Bankers Association and other financial groups sent a joint letter to the OCC on Thursday. They warned that granting charters to crypto firms would be a “fundamental departure” from current banking standards. The groups said crypto companies’ business models do not match the fiduciary duties normally required for trust banks.
They argued that digital asset custody is not a traditional fiduciary activity. They also said the crypto firms’ public application documents lack critical details. This, they claim, makes it hard for the public to understand or challenge their proposed operations. The groups urged the OCC to pause approvals until a full public review takes place.
Crypto Firms Seek Federal Approval
Ripple, Circle, and Fidelity Digital Assets have all applied for OCC national trust bank charters. These licenses would allow them to operate nationwide without seeking individual state approvals. For stablecoin issuers like Circle, the license would streamline payment services and reduce regulatory burdens. It would also let them offer broader financial services beyond stablecoin issuance.
Without this federal license, crypto firms must rely on state-level money transmission licenses, which are time-consuming and complex to manage. Under new legislation, the GENIUS Act allows stablecoin firms to operate with a limited charter. But most issuers still perform other functions outside that scope. Logan Payne, a crypto attorney at Winston & Strawn, explained that a national trust charter remains more attractive. It offers more flexibility without the state-by-state licensing headache.
Banks Fear Competitive Disadvantage
The trade groups claimed the new charter approvals could trigger broader changes in the banking system. They said if crypto firms get these licenses, more fintechs and other companies could follow. The banks believe this would present a “material risk” to the current financial system.
They raised concerns that crypto firms could enjoy lower capital requirements and lighter regulation than traditional banks. This would let them compete unfairly in the payments and custodial space.
Caitlin Long, the CEO of Custodia Bank, responded to the banks’ concerns on X. She said the dispute over trust charters versus full bank charters is “very likely to be litigated.” She noted that if crypto firms can operate with fewer requirements, banks may convert to trust companies themselves. Alexander Grieve of Paradigm added that banks and credit unions rarely agree, but they’re united in resisting crypto competition.
Related: Federal Regulators Outline Crypto Custody Rules for Banks
Regulatory tensions rise
The OCC has not responded publicly to the letter. However, the debate signals growing tension between traditional finance (TradFi) and crypto-native institutions. Crypto firms claim that a national trust charter would also allow them to safely and more efficiently operate under federal regulation. Traditional banks, meanwhile, claim that it opens the way to unsafe operations and loopholes in regulation.
The pushback underscores a broader battle over the future of payments and stablecoin regulation in the United States. With more crypto firms applying for federal charters, the OCC now faces mounting pressure. Its decisions could shape the future structure of the U.S. financial system and who gets to compete in it.
