US Banking Industry Sues OCC Over Crypto Trust Bank Approvals

The US banking industry is pushing back against efforts to integrate cryptocurrency companies into the federal banking system. The Independent Community Bankers of America has sued the Office of the Comptroller of the Currency (OCC) over rules that allow crypto-focused firms like Circle, Ripple, BitGo, and Paxos to obtain national trust bank charters.

The dispute centers around a final rule published by the OCC in March 2023, which clarified that national banks limited to trust-company operations can also conduct related non-fiduciary activities. The regulator maintained at the time that the rule neither expanded nor contracted its existing chartering authority.

According to Rebeca Romero Rainey, President and CEO of ICBA, Congress never intended for the national trust charter to become a 'side door' through which crypto companies could receive federal bank charters while avoiding requirements such as FDIC insurance, Community Reinvestment Act obligations, and the capital and liquidity framework applicable to insured depository institutions.

The lawsuit asks the US District Court for the District of Columbia to declare both the OCC's final rule and the related Interpretive Letter N1176 unlawful. The move comes just months after several major developments for the crypto industry, including Circle's recent approval to establish First National Digital Currency Bank, N.A.