US Banks Sound Alarm on Crypto’s Banking Ambitions: OCC Pressured to Delay Licensing Decisions

In a move that could reshape the future of digital finance in the United States, leading banking trade groups are pushing back against federal regulators considering bank licenses for crypto firms.

The American Bankers Association and other top associations are urging the Office of the Comptroller of the Currency (OCC) to halt approvals for national trust bank charters sought by major crypto players like Circle, Ripple Labs, and Fidelity Digital Assets.

This high-stakes clash underscores growing concerns that granting such licenses would mark a fundamental shift in U.S. financial regulation—and potentially open the floodgates to new risks in the banking system.

In a formal letter to the OCC, traditional banks and credit unions criticized the lack of clarity in the public portions of crypto firms’ charter applications.

They argue that these applications fail to provide enough detail about the companies’ business models, operations, and risk management practices.

Without sufficient disclosure, they claim, neither the public nor industry stakeholders can offer informed feedback on these bids.

The groups are calling for a delay in charter approvals until more information is made available and a proper public comment period is held.

Policy Shift Could Undermine Traditional Banking Standards

The letter also highlights a more profound concern: that allowing crypto firms to obtain national trust bank charters could represent a fundamental departure from established policy.

Traditionally, trust banks are expected to engage in fiduciary activities such as managing trusts and estates or overseeing investments on behalf of clients.

However, crypto companies primarily offer services like digital asset custody—functions the banking lobby argues are not fiduciary in nature. Granting them trust charters, therefore, would stretch the OCC’s mandate and blur regulatory lines.

Beyond concerns about definitions and duties, the banking groups warn of a domino effect. If crypto firms are allowed to operate as federally chartered banks, it could set a precedent for other non-bank entities to seek similar treatment.

This could open the doors to financial institutions with lower capital requirements and fewer regulatory burdens entering the market, increasing systemic risk.

The groups assert that such a transformation of the OCC’s chartering framework should not proceed without broad consultation and debate.

Crypto Industry Fires Back: A Battle Over Competitive Fairness

The crypto sector is not standing still. Caitlin Long, founder of Custodia Bank, warned that this dispute could ultimately end up in court.

She argued that if crypto firms gain access to trust bank charters with lower capital obligations, traditional banks may have no choice but to restructure as trust companies to level the playing field.

Alexander Grieve, head of government affairs at Paradigm, noted the unusual unity between banks and credit unions on this issue. Their coordinated opposition signals the real competitive threat they perceive from the crypto industry.

Logan Payne, a digital asset attorney at Winston & Strawn, pointed to the newly enacted GENIUS Act as a driving factor.

While the Act introduces a stablecoin-specific license, it narrowly limits firms to issuing stablecoins and prohibits broader financial activities.

In contrast, a national trust bank charter would allow crypto firms to offer a wider array of services while avoiding the burdensome state-by-state licensing process.

This regulatory contrast is incentivizing stablecoin issuers to seek the broader, more flexible federal license from the OCC.

A Pivotal Moment for US Financial Regulation

If granted, these charters would allow crypto firms to operate as fully regulated national banks—offering faster settlement, unified regulatory compliance, and a greater variety of financial products.

But critics fear this could create a parallel banking system, one with less oversight and weaker capital requirements.

At the heart of this debate is the question of whether trust charters—originally intended for narrowly focused fiduciary institutions—can be repurposed to fit modern digital asset firms with expansive ambitions.

As the GENIUS Act and similar federal initiatives begin to shape the regulatory landscape for crypto and stablecoins, the OCC’s decision will have far-reaching implications.

Traditional financial institutions are pressing for caution and a robust public dialogue before decisions are finalized.

Meanwhile, digital asset innovators view national charters as a gateway to legitimacy and growth.

The outcome of this policy standoff could redefine the future of banking in the United States—determining not just who qualifies as a bank, but also how financial services are delivered in the era of digital money.