US banking groups, led by the American Bankers Association and other trade associations, have urged the Office of the Comptroller of the Currency (OCC) to delay approving national trust bank charters for cryptocurrency firms like Circle, Ripple Labs, and Fidelity Digital Assets. They argue that these firms’ applications lack transparency and sufficient detail for public scrutiny, raising “significant policy and process concerns.”
The banks claim that granting such licenses would be a “fundamental departure” from traditional fiduciary activities of trust banks, potentially allowing crypto firms to offer services like payments with less regulation and lower capital requirements, which could destabilize the financial system. They also express concerns about volatility, inadequate investor protections, and compliance with anti-money laundering (AML) and know-your-customer (KYC) standards.
Crypto advocates, including firms like Circle and Paxos, counter that blockchain-based systems offer technological advantages like real-time auditing and secure recordkeeping, and seeking licenses reflects a commitment to regulation, not evasion. They argue that national charters would enable broader operations without state-by-state licensing, as incentivized by the GENIUS Act, which limits stablecoin issuers’ activities. Industry voices, like Caitlin Long of Custodia Bank, suggest this debate may lead to litigation, as traditional banks fear competition from crypto firms operating under lighter trust charter rules.
Meanwhile, recent regulatory shifts, such as the OCC’s March 2025 guidance allowing banks to engage in crypto activities without prior approval, indicate a more permissive environment, though banks remain cautious due to lingering regulatory and risk concerns. The lobbying by US banks against crypto firms acquiring bank licenses has significant implications for the financial industry, regulation, and innovation.
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Blocking crypto firms from obtaining national trust bank charters could limit their ability to compete with traditional banks, slowing the adoption of blockchain-based technologies like real-time auditing and secure digital asset custody. This may delay innovation in financial services, such as faster, cheaper payment systems or decentralized finance (DeFi) solutions.
If crypto firms are denied national charters, they may need to navigate state-by-state licensing, increasing compliance costs and complexity. This could discourage smaller crypto firms from scaling, favoring larger players and potentially concentrating market power. Banks argue that crypto firms under lighter trust charter regulations could pose risks due to volatility and weaker AML/KYC compliance.
If licenses are granted without stringent oversight, it might lead to systemic vulnerabilities. Conversely, overregulation could push crypto activities to less-regulated offshore jurisdictions, increasing global financial risks. Restricting crypto firms’ access to charters may limit consumer access to regulated crypto services, pushing users toward unregulated platforms with fewer protections. However, if charters are granted, robust oversight will be crucial to ensure investor safeguards amid crypto’s volatility.
The debate could spark litigation, as seen with cases like Custodia Bank’s, potentially clarifying the legal framework for crypto banking but also prolonging uncertainty. It may also pressure lawmakers to refine legislation like the GENIUS Act, balancing innovation with regulatory rigor. Traditional banks fear losing market share to crypto firms offering competitive services with lower capital requirements.
If crypto firms gain charters, banks may accelerate their own crypto offerings, as permitted by recent OCC guidance, intensifying competition but also integration of crypto into mainstream finance. Denying charters could push crypto innovation to jurisdictions with more favorable regulations, weakening the US’s position as a financial technology leader. Conversely, a balanced approach could position the US as a hub for regulated crypto innovation.