* American banking groups have strongly criticized the Office of the Comptroller of the Currency (OCC) for approving national trust charters for several crypto companies.
* They say that charters provide a status similar to banks without coverage from the Federal Deposit Insurance Corporation (FDIC) or full capital and liquidity requirements.
* These groups warn that this may confuse consumers, encourage regulatory arbitrage, and leave regulators unprepared to deal with any failures in the sector.
The American banking industry challenged the Coordinator's approach from the Office of the Comptroller of the Currency (OCC). This resistance targets the regulatory body's efforts to integrate cryptocurrency firms into the federal banking system.
On December 12, the OCC issued conditional approval for a national trust charter for five digital asset companies, including Ripple, Fidelity, Paxos, the First National Digital Currency Bank, and BitGo. The banking regulator confirmed that digital currency applicants underwent the same "rigorous review" required of any applicant for a national bank charter.
The American banking industry challenges the OCC's move
However, the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) argue that the OCC's actions create a two-tier banking system.
Their central claim is that fintech and cryptocurrency companies are granted prestigious national charters without carrying federal deposit insurance (FDIC) coverage or meeting the traditional capital and liquidity standards required from full-service banks.
The groups argue that this structure encourages what they describe as regulatory arbitrage at the federal level. By obtaining a national charter, cryptocurrency companies can benefit from the federal prohibition on state money transmission laws. At the same time, they avoid many compliance obligations that apply to insured depository institutions.
Rob Nichols, head of the Applied Behavior Agency, said that approvals "blur the lines" of what constitutes a bank. He also asserts that this erosion of definitions risks undermining the integrity of the charter itself.
In her opinion, expanding the powers of the secretariat for companies that do not perform traditional credit duties creates a class of institutions that resemble banks in name and scope but lack similar oversight.
In addition to competitive concerns, banking groups warn that consumers may have difficulty distinguishing between insured banks and national entities that hold large amounts of uninsured digital assets. They argue that the open oversight office has not adequately explained how it would manage the failure of such an entity, especially if it holds billions of dollars in digital assets outside the traditional safety net.
ICBA wants to halt the charter
The International Council of Legal Oversight also challenged the legal authority of the Office of Legal Oversight in issuing the charter. The group focused its criticism on Interpretive Letter No. 1176. This guidance allowed fund banks to engage in non-credit activities such as holding reserves of stablecoins.
Rebecca Romero Rainey, chairwoman of the International Council of ISBAN, described this move as a "radical political change" that extends beyond its historical goal. She added: "The dramatic change in OCC policy under Interpretive Letter #1176 represents a departure from the role of traditional credit companies and allows for an inconsistent regulatory framework that threatens financial instability — requiring the agency to change course."
The group argues that the cooperative consumer office effectively allows non-bank fintech companies to borrow the credibility of the American banking system while avoiding the "full scope" of regulations imposed on insured institutions.
In light of this, both trade groups called for an immediate halt and rescission of approvals. They warn that the current framework may produce institutions that the Cooperative Coordination Office "will not be prepared to resolve in an orderly manner," and that such a failure could leave traditional banks and the broader financial system exposed.
