The American Bankers Association (ABA) has urged the Office of the Comptroller of the Currency (OCC) to decelerate the issuance of fresh national trust bank charters for crypto firms. The development comes just days after the OCC allowed BitGo to convert its BitGo Trust Company into a national bank.
In a letter addressed to the OCC, the ABA pointed out that certain parameters of the GENIUS act are yet to be finalized, and until then, the OCC must stay patient in terms of approving national trust bank charters for digital asset companies.
“Congress and federal and state regulators have not yet adequately defined regulatory frameworks applicable to entities engaged in stablecoin and other digital asset activities,” the correspondence said.
The ABA noted that under the GENIUS Act the U.S. Treasury the Federal Reserve, as well the the Federal Deposit Insurance Corporation (FDIC) have to work alongside the OCC and the state regulators to roll out the stablecoin-focussed regulation into full effect — a task that is yet far away from completion.
It furthermore reminded the OCC that if an uninsured bank fails to take off after obtaining its approval, the OCC itself will be held responsible for cleaning up the mess.
As of now, the OCC works on the basis of its old rules that do not work well with the advanced crypto firms.
The ABA said, these businesses working with digital assets could introduce “unknown risks” to the financial sector that the old rulebook might not be able to handle.
The letter from the ABA essentially said that the OCC is not yet equipped to manage a “bank failure” involving digital assets.
The OCC is yet to respond to ABA’s letter.
This is not the first time that the OCC has received such a request. In October last year, the ABA along with the America’s Credit Unions, Consumer Bankers Association, Independent Community Bankers of America, and National Bankers Association had also reached out to the OCC with the same request.
Despite the suggestions from the banks, the OCC has provisionally cleared BitGo, Fidelity, and Paxos to turn their state-level trust firms into federally chartered national trust banks in recent months.
While traditional banks in the U.S. are state-focussed, national charter banks are authorized by the OCC to function across all the states and follow one rulebook. This helps national charter banks to bypass varying state rules to offer more personalized services to local markets and users.