Small Banks Sue to Block Crypto Firms from Obtaining National Trust Charters
The Independent Community Bankers of America (ICBA) has filed a lawsuit against the Office of the Comptroller of the Currency (OCC) and Comptroller Jonathan Gould, seeking to block national trust charters granted to crypto firms. The ICBA argues that these charters allow digital-asset companies to gain the credibility of a federal bank without adhering to deposit insurance, capital standards, or community-lending duties that apply to traditional banks. The lawsuit targets Interpretive Letter 1176 and a March 2024 rule, which the ICBA claims improperly expanded the National Bank Act to include non-fiduciary crypto companies.
The lawsuit specifically challenges the conditional approvals granted to crypto firms like Coinbase, Ripple, BitGo, and Paxos, as well as a controversial charter for World Liberty Trust Company, linked to President Donald Trump’s family. The ICBA highlights concerns over Protego Holdings, a firm with a flawed governance structure and unresolved vendor lawsuits, which received a conditional charter in February 2024. The group argues that such charters undermine consumer protections and regulatory oversight.
ICBA President Rebeca Romero Rainey criticized the OCC’s actions, stating that Congress did not intend for crypto firms to bypass federal protections. Meanwhile, Comptroller Gould defended the policy, asserting that it fosters competition and innovation. The lawsuit also touches on broader regulatory issues, including the failure of the Digital Asset Market Clarity Act (CLARITY Act) to pass, which would have clarified the legal status of certain crypto tokens. The Trump family’s crypto ventures have faced scrutiny over potential conflicts of interest and corruption allegations.