ICBA Sues OCC Over Expansion of Trust Charters to Crypto Companies

The Independent Community Bankers of America (ICBA) has filed a lawsuit against the Office of the Comptroller of the Currency (OCC) over the agency's expansion of trust charters to crypto companies. The ICBA alleges that the OCC has exceeded its authority in granting trust charters to non-fiduciary firms, which could drain deposits away from community banks and put them in institutions with no obligation to lend to local businesses and communities.

The lawsuit targets the OCC's rule finalized earlier this year, which codifies an interpretive letter from President Donald Trump's first term. This rule significantly widens the agency's ability to grant trust charters, which could lead to the proliferation of crypto companies with trust charters that are not subject to the same regulatory requirements as community banks.

The ICBA argues that the OCC's actions create a gaping hole in financial regulation and that trust charter crypto companies offer fewer consumer protections. Consumers at national trust banks will lack many of the protections that apply to traditional banks, including deposit insurance, the separation of banking and general commerce, and prohibitions on transactions with hedge funds and other risky investments.

The lawsuit also points to the separation of banking and commerce, and the potential risk that granting these trust charters could pose to that principle.