The Independent Community Bankers of America (ICBA) has filed a lawsuit against the Office of the Comptroller of the Currency (OCC), alleging that the agency has exceeded its legal authority by granting national trust bank charters to several cryptocurrency companies.
The ICBA claims that crypto trust banks are not held to the same standards as traditional banks.
In its legal action, the ICBA contends that the OCC is improperly using its power to allow a surge of digital asset trust banks into the banking system, which, according to the organization, is unfairly disadvantaging community banks.
The lawsuit was submitted in federal court, where the ICBA argues that the OCC's actions are not sanctioned by the National Bank Act. The group asserts that the crypto firms are entering the U.S. banking landscape without the stringent regulatory scrutiny that community banks must endure, thus placing these smaller institutions at a significant competitive disadvantage.
The ICBA, a prominent advocate for smaller banking institutions in the U.S., has previously opposed the Digital Asset Market Clarity Act due to concerns that it would enable direct competition from stablecoin provisions, undermining the deposit accounts that are vital to their operations. Now, the ICBA is focusing on the trust charters that these crypto entities are seeking to gain access to the banking and payments systems.
“Congress did not create the national trust charter as a side door into the banking system for crypto firms seeking the credibility of a federal bank charter,” stated ICBA President and CEO Rebeca Romero Rainey. She highlighted that these firms do not face the same obligations concerning capital, liquidity, supervision, and insurance from the Federal Deposit Insurance Corp.
In response to inquiries from CoinDesk, an OCC representative refrained from commenting on the ongoing litigation. However, it is known that the OCC has been consistently approving trust charters for crypto businesses, which do not follow the same operational models or offer the same services as traditional community banks. For example, these firms typically do not provide the cash deposit accounts that require FDIC insurance.
The recent trend of granting national trust charters has been viewed by banking regulators as a revival of new banking entities following a prolonged period of stagnation. Some of these charters have been awarded to crypto-focused banks, including Protego and Erebor. Others have been granted to established crypto companies, such as Coinbase, Circle, and Crypto.com.
Among the latest approvals is World Liberty Financial, partly owned by former President Donald Trump and his family, which has attracted criticism from figures like Democratic Senator Elizabeth Warren. Warren accused the OCC of allowing potential presidential corruption and raised concerns about the charter providing Trump and his family with new profit avenues through this approval.
Recently, the OCC also granted a full national bank charter to OpenReserve Bank, a blockchain bank backed by various crypto investors, including Andreessen Horowitz, Jump Capital, and Coinbase Ventures.