Bank group sues OCC over granting crypto trust charters

The Independent Community Bankers of America (ICBA) filed a lawsuit against the Office of the Comptroller of the Currency (OCC) in federal court on Friday. ICBA alleges that the OCC is asserting sweeping new powers to charter national trust banks that the National Bank Act does not authorize. ICBA says the agency lets these companies enter the U.S. banking system without the same level of regulatory oversight that community banks face. ICBA says this puts small banks at a severe competitive disadvantage. The group is targeting trust charters that crypto firms pursue to enter the U.S. banking and payments system.

ICBA President and CEO Rebeca Romero Rainey said Congress did not create the national trust charter to give crypto firms banking-system access and federal-charter credibility. Rainey said these firms do not face the same obligations for capital, liquidity, supervision and insurance from the Federal Deposit Insurance Corporation (FDIC). An OCC spokesperson said the agency does not comment on litigation.

The OCC has been granting a steady stream of trust charters to crypto firms. However, these companies do not operate under the same business model or intend to offer the same services as typical community banks. These companies do not offer the same kind of cash deposit accounts for which FDIC insurance is designed and required.

ICBA is one of the largest U.S. banking advocacy organizations and typically represents smaller institutions. ICBA played a significant role in opposing the Digital Asset Market Clarity Act, which failed to advance in the U.S. Senate last month. Bankers' objections contributed to that failure. The bankers argued that the legislation's stablecoin provisions did not protect banks against direct competition with deposit accounts central to their businesses.