Banking Groups Urge OCC to Halt Crypto Charter Reviews

The American Bankers Association (ABA) and several other prominent banking and credit union trade associations have collectively urged federal regulators to temporarily halt the review of national bank charter applications submitted by crypto firms such as Circle and Ripple. This request was formally presented in a joint letter addressed to the Office of the Comptroller of the Currency (OCC). The letter underscores the potential for significant changes in longstanding regulatory practices if these applications are approved.

The coalition, led by the ABA, contends that the OCC should refrain from evaluating these applications until critical legal and policy issues are thoroughly addressed. The signatories of the letter assert that the business models proposed by these crypto firms are not transparent enough for a comprehensive regulatory analysis or public scrutiny. This lack of clarity raises concerns about the firms' eligibility for national trust bank charters, which are traditionally reserved for institutions engaged in fiduciary services.

The banking groups argue that the core services offered by firms like Circle and Ripple, particularly crypto custody, do not meet the fiduciary requirements necessary for obtaining such charters. They caution that proceeding without full public consultation could lead to regulatory inconsistencies and potentially allow firms with limited capital obligations to bypass established financial oversight structures. This could result in unequal standards, where crypto companies operate with reduced regulatory burdens compared to traditional banks, thereby weakening overall financial safeguards and introducing new risks into the banking system.

If granted, a national bank charter would enable crypto companies to operate across the United States under a single federal license, eliminating the need for separate state approvals. While this would simplify operations for the applicants, it has sparked concerns within the traditional financial sector. Critics warn that such a shift could create unequal standards and weaken financial safeguards, potentially introducing new risks into the banking system.

Custodia Bank founder Caitlin Long responded to the pushback on social media, noting that the reaction highlights regulatory imbalances. She suggested that if national trust charters offer lighter oversight, traditional banks might consider switching to those models to cut compliance costs. This dispute reflects a broader trend in which digital asset companies are increasingly pursuing federal banking licenses to enhance credibility, expand services, and streamline compliance with evolving regulations. Firms like Circle, Ripple, and Fidelity are seeking to position themselves as key players in regulated financial markets.

Legal analyst Logan Payne noted that new legislation, such as the GENIUS Act, which introduced a specialized license for stablecoin issuers, may be unintentionally encouraging companies to seek more comprehensive banking charters to maintain operational flexibility. Alexander Grieve, head of government affairs at crypto investment firm Paradigm, commented on the rare unity among traditional financial institutions. He stated, “Banks and credit unions rarely agree on anything. But they seem to agree that they’re finally about to have some competition from crypto.”

The OCC’s decision on whether to grant federal charters to crypto firms like Ripple and Circle carries significant regulatory and competitive implications. As traditional financial institutions push back against what they see as a disruptive shift in oversight standards, the outcome will likely shape how digital asset companies engage with the U.S. banking system in the years ahead. The dispute underscores the evolving landscape of financial regulation and the challenges posed by the integration of digital assets into traditional banking frameworks.