Community banks sue U.S. regulator over charters for crypto firms

The Independent Community Bankers of America (ICBA), representing banks with under $10 billion in assets, has filed a lawsuit against the U.S. Office of the Comptroller of the Currency (OCC).

The big picture: The suit, filed in the U.S. District Court for the District of Columbia, challenges the OCC’s decision to grant limited federal bank charters – known as national trust charters – to cryptocurrency companies.

• ICBA alleges that the OCC’s rule and related guidance to enable crypto firms to obtain charters exceeds the agency’s regulatory authority and grants legitimacy to digital asset companies without adequate safeguards.
• ICBA President Rebecca Romero Rainey argues that customers expect federally chartered banks to carry certain protections, which crypto firms under these charters lack.
• The group is requesting the court to revoke the OCC’s rule and return the regulator to its statutory limits.

Driving the news: Under a rule change first supported during the Trump administration, the OCC has issued national trust bank charters to a number of crypto and fintech companies.

• While these charters allow companies to manage and hold assets and to settle payments quickly, they do not permit taking cash deposits or issuing loans.

Go deeper: ICBA asserts that community banks face stricter regulations and oversight compared to crypto firms operating under national trust charters.