Community Banks Sue OCC Over Crypto Bank Charters

America's community banks are challenging the Office of the Comptroller of the Currency (OCC) in court over its practice of issuing bank charters to cryptocurrency companies. The Independent Community Bankers of America (ICBA) filed a lawsuit on Friday in the U.S. District Court for the District of Columbia, arguing that the OCC's authority to charter national trust banks for crypto firms exceeds the limits set by Congress.

The complaint focuses on a March 2, 2026 final rule tied to the OCC's Interpretive Letter No. 1176, seeking to declare both unlawful. ICBA President and CEO Rebeca Romero Rainey contends that allowing crypto firms to obtain national trust charters for substantial non-fiduciary activities oversteps the agency's granted authority. She also highlights that these firms gain the credibility of a federal bank charter without the same obligations and protections as traditional banks, such as Community Reinvestment Act requirements, consolidated supervision, capital and liquidity standards, and FDIC insurance.

The lawsuit highlights concerns over consumer protection, noting that digital assets held at crypto firms operating under a trust charter lack the federal safeguards customers expect from a chartered bank. The complaint specifically targets Protego Holdings, whose conditional charter ICBA seeks to vacate, citing governance and risk-control shortcomings. The suit escalates an ongoing conflict as more crypto firms apply for OCC charters, including Circle, Ripple, Paxos, Fidelity, BitGo, Kraken's parent Payward, Block, and World Liberty Financial.

The legal action comes as the OCC rushes to finalize GENIUS Act stablecoin rules by November, adding another layer to the debate over the integration of crypto into the federal banking system. Sen. Elizabeth Warren has also criticized the OCC's approvals as illegal, a claim disputed by the industry.