Top US Banking Groups Urge OCC to Delay Crypto Firm Charters

Top American banking groups have called on the Office of the Comptroller of the Currency (OCC) to delay its decision on granting national bank charters to digital asset companies Ripple and Circle. The banking groups, which include the American Bankers Association, America’s Credit Unions, Consumer Bankers Association, Independent Community Bankers of America, and National Bankers Association, have expressed concerns over the lack of transparency in the business plans of these crypto firms.

Ripple and Circle are among several digital asset companies that have applied to establish federally regulated national trust banks in the US. Circle, following its IPO, applied for a license to manage USDC reserves and institutional crypto assets. Ripple soon followed, filing to oversee its stablecoin operations and expand its services under OCC oversight. Their proposed entities are First National Digital Currency Bank and Ripple National Trust Bank, respectively.

The banking groups argue that the business models of these crypto firms do not meet the legal requirement for national trust banks to primarily engage in fiduciary activities. In a joint letter dated July 17, the groups stated that approving the pending applications would set a precedent where custody and payments services become the basis for granting a trust bank charter. This could potentially allow non-bank entities to exploit national bank charters without adequate oversight, leading to regulatory and stability risks in the financial system.

The banking groups' call for a delay is seen as a necessary step to ensure that all relevant information is disclosed and that the regulatory framework is robust enough to handle the unique challenges posed by crypto firms. They believe that a thorough evaluation of Ripple and Circle's plans is essential before any decision is made. This evaluation should include a detailed assessment of their operational models, risk management strategies, and compliance with existing regulations.

The OCC's decision on national bank charters for crypto firms is a critical juncture in the evolving landscape of digital finance. The outcome of this decision will have far-reaching implications for the regulatory environment and the stability of the financial system. The banking groups' call for a delay underscores the need for a cautious and well-informed approach to integrating crypto firms into the traditional banking system. It remains to be seen how the OCC will respond to these concerns and whether it will heed the banking groups' advice to postpone the approvals.