Banking associations in the US are calling on regulators to delay any decisions regarding banking licenses for cryptocurrency firms until more details about the proposals come to light. They argue that moving forward with these applications represents a significant shift from existing policies.
In a letter to the OCC, groups including the American Bankers Association expressed concerns about approvals for National Bank Charters for entities like Stablecoin issuers Circle Internet Group and Ripple Labs, highlighting critical policy and procedural questions.
The trade groups pointed out that there are significant legal and policy considerations to determine whether the business plans of these applicants align with the activities typically associated with National Trust Banks.
Recently, companies such as Circle, Ripple, and Fidelity have been among the latest to seek banking licenses from the OCC.
Banks Seek to Halt Crypto Banking Licenses
The letter requests that the OCC hold off on any decisions about these charters, as the public information available on the applications is insufficient for proper evaluation. They noted that the proposed business models do not reflect the conventional activities performed by National Trust Charter Banks, advocating for more public scrutiny of the OCC’s actions.
According to the groups, offering custody services for digital assets is not a recognized banking activity. Granting these charters without traditional banking activities would represent a major alteration in OCC policies, one that should undergo a thorough announcement and review process.
If crypto firms are allowed to operate as trust banks in the US, providing traditional banking services such as payments, it could pose significant risks to the US banking and financial systems.
Banking Group’s Reaction
Caitlin Long, founder of Custodia Bank, recently shared her thoughts on social media about the letter’s implications. She raised concerns about whether this trust charter might serve as a “de facto bank charter” with reduced capital requirements, hinting at potential legal action.
She referred to the response from the Banking Industry Association as noteworthy, questioning why banks would hesitate to transition to trust companies if it could ease capital requirements and regulatory burdens.
Interest in Banking Charters for Crypto Companies
Logan Payne, a lawyer focusing on digital currencies, mentioned that the newly announced Stablecoin Act incentivizes Stablecoin issuers to pursue banking licenses. Although this new license restricts crypto firms to activities related strictly to issuing Stablecoin, he pointed out that many US issuers are already engaged in activities that exceed this scope.
Despite the new licensing framework, Payne explained that these companies would still require a state-level money transmission license to operate across the country, thereby motivating them to seek the OCC’s National Trust Bank Charter for a broader range of operational activities.
While the charter may allow for expanded activities beyond just issuing Stablecoins, Payne remarked that it would alleviate the necessity of obtaining multiple state licenses.
