Rita Dfouni
- U.S. bank groups urge OCC to delay crypto firm bank charters over policy, legal, and risk concerns.
- Associations say crypto firms like Circle and Ripple lack fiduciary activities required for national trust banks.
- Custodia Bank’s Caitlin Long says the issue may trigger litigation over regulatory loopholes.
Five major U.S. banking and credit union associations are urging the Office of the Comptroller of the Currency (OCC) to delay approvals of national bank charters for crypto firms, warning that the move could upend existing regulatory frameworks and pose systemic risks.
In a joint letter submitted on July 17, the American Bankers Association, America’s Credit Unions, Consumer Bankers Association, Independent Community Bankers of America, and National Bankers Association argued that approving these applications would represent a “fundamental departure” from long-standing OCC policy.
The letter targets crypto firms such as Circle, Ripple, Fidelity Digital Assets, and National Digital Trust Co., all of which have submitted applications to obtain national trust bank charters.
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“The public portions of the applications do not provide sufficient information for the public to assess or provide meaningful comment on the Applicants’ proposed business models and operations,” the groups wrote.
They emphasized that providing custodial services for digital assets does not qualify as fiduciary activity, and that granting such charters without the applicants engaging primarily in fiduciary roles would be a significant change in OCC policy — one that must undergo proper public notice and comment.
Furthermore, the groups warned that if crypto firms receive approval to operate as national trust banks offering “traditional banking services like payments”, it could open the floodgates for other companies to follow — potentially presenting a material risk to the U.S. financial system.
“Granting charters where traditional fiduciary activity is absent — or secondary at best — would represent a significant change,” they added.
Industry response and legal implications
Caitlin Long, founder of Custodia Bank, responded on X, calling the bank groups’ resistance “an interesting reaction.” She noted that the issue of using trust charters as de facto bank licenses with lighter capital requirements is “very likely to be litigated.”
“If what they fear will happen ends up happening,” Long added, “then why wouldn’t banks just convert to trust companies and keep their existing businesses at a small fraction of the capital requirements and regulations?”
Source: Caitlin Long
