US Banking Groups Urge OCC to Delay Crypto Firm Bank Licenses

US banking and credit union groups have formally requested the Office of the Comptroller of the Currency (OCC) to delay decisions on crypto firms’ bank license applications, citing significant policy and procedural concerns. These groups argue that approving national bank charters for crypto companies like Circle and Ripple could represent a fundamental shift in regulatory norms, potentially impacting the broader financial ecosystem. They emphasize the need for greater transparency and public scrutiny before the OCC moves forward with these unprecedented banking charters.

In a coordinated effort, prominent US banking and credit union associations have petitioned the OCC to halt the approval process for national bank charters submitted by crypto firms. These applications, including those from stablecoin issuers Circle Internet Group and Ripple Labs, propose a new model where crypto companies operate as federally regulated banks. The groups contend that the public disclosures accompanying these applications lack sufficient detail, preventing meaningful evaluation of the proposed business models. They warn that granting these charters without comprehensive public input would mark a significant departure from established OCC policy, particularly because the crypto firms’ business plans do not align with traditional fiduciary activities historically associated with national trust banks.

The banking groups emphasize that providing custodial services for digital assets does not constitute a fiduciary activity under current regulatory frameworks. They argue that issuing charters to entities primarily engaged in such activities could undermine the OCC’s longstanding standards. The letter highlights potential risks, noting that if crypto firms are permitted to operate as national trust banks offering payment services, it could open the door for other non-traditional entities to seek similar charters. This, they assert, poses a material risk to the stability and integrity of the US banking system. The groups call for a formal public notice and comment period to ensure transparency and thorough regulatory oversight before any approvals are granted.

Caitlin Long, founder of Custodia Bank, characterized the banking groups’ opposition as an “interesting reaction,” suggesting that the debate over whether trust charters can serve as de facto bank charters with reduced capital requirements is likely to result in litigation. She questioned why traditional banks would not convert to trust companies to benefit from lighter regulatory burdens if the OCC permits crypto firms to do so. Meanwhile, Alexander Grieve of venture firm Paradigm noted the unusual consensus among banks and credit unions, interpreting it as a sign that the traditional banking sector is bracing for increased competition from crypto entities.

Legal experts point to recent regulatory developments as catalysts for crypto firms seeking national bank charters. Logan Payne, a crypto-focused attorney, explained that the GENIUS Act’s stablecoin provisions incentivize issuers to pursue banking licenses to expand their operational scope beyond the narrow limits of stablecoin issuance. Since stablecoin issuers must still obtain state-level money transmission licenses to operate nationally, a national trust bank charter from the OCC offers a streamlined alternative. This charter enables firms to conduct a broader range of financial activities without navigating the complexities of multi-state licensing, positioning it as an attractive regulatory pathway for crypto companies aiming to scale.

The intersection of crypto innovation and traditional banking regulation is evolving rapidly. The push by crypto firms to secure national bank charters reflects a strategic effort to gain federal oversight and operational flexibility. However, the resistance from established banking groups underscores the challenges of integrating decentralized finance models within existing regulatory frameworks. As the OCC evaluates these applications, the outcome will likely set important precedents for how digital asset custodians and stablecoin issuers are regulated in the United States.

The ongoing dialogue between US banking groups and the OCC highlights the complexities of adapting regulatory policies to accommodate emerging crypto business models. While crypto firms seek national bank charters to enhance their legitimacy and operational capabilities, traditional financial institutions caution against hasty approvals that could disrupt established fiduciary standards. Moving forward, transparent regulatory processes and public engagement will be critical to balancing innovation with financial system stability. Stakeholders should closely monitor the OCC’s decisions, as they will shape the future landscape of crypto banking and federal oversight.