Crypto.com's Bank Charter Push Underlines Regulatory Tightrope for Crypto Innovation

Crypto.com has taken a significant step toward expanding its presence in the U.S. digital asset market by submitting a National Trust Bank Charter application to the Office of the Comptroller of the Currency (OCC), according to a Lookonchain report. The move, announced on October 24, aims to leverage the firm's custody technology and services across multiple blockchains, including its own Cronos protocol. The application does not disrupt the operations of Crypto.com Custody Trust Company, which remains a regulated custodian under New Hampshire's Banking Department. This filing underscores growing regulatory scrutiny and innovation in crypto custody, as the sector grapples with balancing security, compliance, and technological advancement.

The regulatory landscape for digital assets has intensified following recent enforcement actions. In Nevada, regulators ordered Fortress Trust to halt operations amid insolvency claims, marking another example of states tightening oversight of crypto custodians, as reported by Cryptonews. Earlier this year, a federal judge upheld a cease-and-desist order against Crypto.com for offering sports betting-linked contracts, according to a Crypto.news article. These actions reflect broader concerns about insolvency risks and smart contract vulnerabilities, prompting the Federal Reserve, FDIC, and OCC to issue updated custody guidance that mandates clearer disclosures and risk management protocols, as reported by Cryptonews.

Meanwhile, U.S. lawmakers are racing to finalize a comprehensive crypto regulatory framework by year-end, with 90% of the bill reportedly agreed upon, according to a Coinpedia report. The remaining 10% focuses on decentralized finance (DeFi), where policymakers aim to regulate centralized intermediaries like Coinbase without stifling innovation. Critics, however, warn that the proposed legislation could inadvertently harm DeFi protocols and wallet development. Summer Mersinger of the Blockchain Association argued that the draft risks "effectively banning decentralized finance," while Sen. John Kennedy cautioned against a rushed approach that could create a flawed framework.

The debate underscores the tension between fostering innovation and ensuring consumer protection. While traditional banks express concerns about stablecoin yield restrictions and financial stability, crypto advocates emphasize the need for balanced regulation. With bipartisan support and direct involvement from industry leaders, 2025 may mark a pivotal year for U.S. crypto policy, offering clarity to a rapidly evolving market.