Community Banks Sue Over Crypto Firms’ Trust Charters

The Independent Community Bankers of America (ICBA) has filed a lawsuit against the Office of the Comptroller of the Currency (OCC), challenging its decision to allow cryptocurrency firms to obtain national trust bank charters. The lawsuit, filed on October 2 in the US District Court for the District of Columbia, targets a recent rule and related guidance that simplify the process for crypto businesses to apply for these charters.

The ICBA, which represents smaller banks with assets typically under $10 billion, argues that the OCC has overstepped its authority by extending trust charters to firms engaged in activities beyond traditional trust services. The group contends that crypto firms operating under these charters are not subject to the same regulatory safeguards as conventional banks, including requirements related to capital, liquidity, and Federal Deposit Insurance Corporation (FDIC) insurance.

ICBA president and CEO Rebeca Romero Rainey expressed concern that consumers might mistakenly believe federally chartered crypto firms offer the same protections as traditional banks. She emphasized that any non-fiduciary firm seeking the benefits of a federal bank charter should meet the same standards as community banks.

The lawsuit comes amid growing tensions between traditional banks and the crypto industry over access to the US financial system. The OCC, which has approved several such charters under President Donald Trump’s administration, declined to comment on the litigation. These charters allow firms to hold and manage customer assets and facilitate payments, but they do not permit them to accept cash deposits or make loans.