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The US banking industry has mounted a challenge to the approach of the Office of the Comptroller of the Currency (OCC). This resistance targets the regulator’s efforts to integrate cryptocurrency companies into the federal banking system.
On December 12, the OCC issued conditional approval of the National Trust Charter for five digital asset companies, including Ripple, Fidelity, Paxos, First National Crypto Bank and BitGo. The banking regulator has confirmed that digital currency applicants are subject to the same “rigorous review” as any applicant for a national bank card.
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US banking industry challenges OCC move
However, the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) argue that OCC procedures Create a two-tier banking system.
Its central claim is that fintech and cryptocurrency companies are awarded prestigious national charters without holding Federal Deposit Insurance Corporation Coverage (FDIC) Or meet the traditional capital and liquidity standards required by full-service banks.
The groups claim that this structure encourages what they describe as regulatory arbitrage at the federal level.
To obtain a national card, Cryptocurrency businesses can benefit From federal prohibition to state money transfer laws. At the same time, they avoid many of the compliance obligations that apply to insured depository institutions.
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He said Enforcement Agency chief Rob Nicholls said the approvals “blur the lines” of what constitutes a bank. He also points out that this erosion of definitions risks weakening the integrity of the Charter itself.
In their view, the extension of fiduciary powers to companies that do not perform traditional fiduciary functions creates a class of institutions that resemble banks in name and purpose, but lack similar oversight.
At the same time, his interest goes beyond competition.
Banking groups warn that consumers may have difficulty distinguishing between insured banks and national institutions that hold large amounts of uninsured digital assets.
They argue that the Office of Open Oversight has not adequately explained how to manage the failure of such an entity, especially if it holds billions of dollars in digital assets outside the traditional safety net.
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ICBA wants to stop the paper
The International Supervisory Board also challenged the legal authority of the Office of Legal Supervision in issuing the Charter.
The group focused its criticism on the Explanatory Letter No. 1176. This guide allowed the banks of funds to engage in non-fiduciary activities such as custody. stablecoin reserves.
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ISPAN International Council President Rebecca Romero Rainey described the movement as a “radical political change” that extends beyond its historical scope.
“The dramatic change in OBR policy under Explanatory Letter #1176 is a departure from the role of traditional trusts and allows for an inconsistent regulatory framework that threatens financial instability – requiring the agency to change course,” added Rainey.
The group argues that the Consumer Cooperative Office allows non-banking fintech companies to take out credit American banking system Effectively avoiding the “full range” of regulations imposed on insured institutions.
After this, the two business groups demanded an immediate halt and cancellation of the approval.
They warn that the current framework may produce institutions that the CCO may not be “prepared to resolve in an orderly manner”. In his view, such a failure could leave traditional banks and the wider financial system exposed.
