ICBA Sues OCC Over Crypto Trust Charter Approvals

A new lawsuit has been filed by the Independent Community Bankers of America (ICBA) against the Office of the Comptroller of the Currency (OCC) over the approval of national trust bank charters for several crypto and fintech firms. The ICBA claims that the OCC has exceeded its authority in granting these charters, which would allow the firms to provide asset custody and settlement services nationwide without being subject to the same regulations as traditional banks.

The ICBA argues that this exemption would allow crypto firms to enter the banking system under 'lightly regulated national charters' rather than more rigorously regulated traditional bank charters, which would be unfair competition to community banks. The group also claims that the uninsured national bank charters could spread financial market instability.

The crypto industry has responded to the lawsuit by slamming it as an attempt to protect the banks' turf, with The Digital Chamber (TDC) arguing that crypto firms did not evade regulations but sought them based on the nature of their business. The OCC's Jonathan Gould also rejected the banks' claims, saying that his 'job is not about incumbent protection.'

It remains to be seen how the lawsuit will pan out, with some policy watchers believing that it could stall the recent SEC push to modernize crypto custody rules. The U.S. government will have to balance its desire to nurture and scale stablecoins with its need to protect American consumers and deal with an incumbent who wants to protect its turf.