Crypto Bank Charter Bids Face Pushback from US Banking Groups

• US banking groups want regulators to pause crypto firms’ bank license approvals.

• They say the applications lack details and could change long-standing rules.

• Crypto firms like Ripple and Circle seek federal licenses for wider operations.

US banking trade associations call on regulators to halt approvals for crypto firms seeking national trust bank charters. In a joint letter sent Thursday, the American Bankers Association and several credit union groups urged the Office of the Comptroller of the Currency (OCC) to delay any decisions until more details about the applicants’ business models are made public.

The letter names Circle Internet Group, Ripple Labs, and Fidelity Digital Assets as key applicants. If approved, these companies would gain the ability to operate as national banks, offering services like payments and custody without needing state-level licenses.

The groups claim the public has not been given enough information to assess the crypto firms’ proposed operations. They argue that granting charters to firms not engaging in traditional fiduciary activities would mark a “fundamental departure” from OCC policy.

Banking Sector Warns of Regulatory Shift

Whether offering digital asset custody qualifies as a fiduciary activity is at the center of the debate. Traditional trust banks typically perform estate and asset management services, roles that the crypto applicants do not emphasize.

The banking groups argue that allowing charters in such cases “without traditional fiduciary activity” could reshape the regulatory landscape. If crypto companies are granted national trust bank status, it could open the door for others to do the same, raising concerns about oversight and capital requirements.

They emphasized the need for a formal public notice and comment period before such a major shift in policy is enacted.

Crypto Firms Eye Federal Access and Flexibility

National trust bank charters would allow crypto firms to settle payments faster, operate across all US states, and reduce the need for multiple state licenses. Logan Payne, a crypto attorney at Winston & Strawn, noted that new laws under the GENIUS Act restrict the scope of stablecoin-only licenses. As a result, many firms are seeking broader authority through national bank charters.

He pointed out that nearly all current stablecoin issuers operate beyond the limits of the new license. Applying for a trust charter with the OCC provides wider flexibility without state-by-state compliance.

Custodia Bank’s founder, Caitlin Long, commented on the issue via X, saying the dispute over capital requirements and the use of trust charters is “very likely to be litigated.” She also questioned whether banks might adopt similar charters to ease regulatory burdens.