Banking Groups Urge OCC to Halt Crypto Trust Bank Charters

Top American banking trade groups have urged the Office of the Comptroller of the Currency (OCC) to halt the approval of national trust bank applications submitted by crypto firms. This call comes as Ripple Labs and Circle Internet Financial, among others, seek federal trust bank charters. These charters would enable them to offer custodial and payment services under national oversight.

On July 17, the American Bankers Association, America’s Credit Unions, and other groups submitted a letter to the OCC, requesting a pause on decisions regarding these applications. The groups argue that the applications lack full disclosure and could significantly alter long-standing banking policies. They contend that the public portions of these applications do not provide sufficient information for meaningful public assessment or comment.

The banking groups express concerns that the proposed trust banks by Ripple and Circle do not meet traditional fiduciary requirements. These firms intend to offer custodial and stablecoin-related services, which the banks argue fall outside the scope of standard trust bank operations. Traditional trust banks typically perform fiduciary duties such as estate or asset management. The banking groups assert that approving these crypto applications could allow firms to bypass these obligations, potentially shifting the main criteria for trust bank approvals towards payment services and asset custody.

Banking associations warn that these applications may create a regulatory loophole, permitting non-banks to access the privileges of national bank charters without being subject to the same oversight and capital requirements as conventional banks. They stress the need for public input before the OCC changes precedent, emphasizing that a transparent process is essential when evaluating business models that introduce new risks to the financial system.

The letter argues that allowing such firms to operate under national charters without clear fiduciary activity could trigger broader policy issues. This could weaken regulatory safeguards designed to protect the public. The recent GENIUS Act, which introduced a stablecoin framework, is adding urgency to these applications. Under the new law, stablecoin issuers must follow strict licensing rules but are limited to stablecoin issuance only. By securing a national trust charter, firms like Ripple and Circle can offer broader services, including issuing stablecoins and managing crypto assets under one license. This would eliminate the need for multiple state-level licenses.

Banking groups worry that this could encourage more crypto companies to seek similar status, creating uneven regulatory obligations across the financial sector. They believe that granting crypto charters may weaken oversight and create unfair advantages for non-bank firms. The groups have asked the OCC to postpone its decision on the crypto firms' charter bids until more details about their plans are made public, ensuring a thorough evaluation of the potential risks and benefits to the financial system.