US banking group sues regulator over crypto trust charters

Community bankers argue that crypto firms receiving national trust charters should face comparable regulatory requirements when conducting similar banking activities.

The Independent Community Bankers of America (ICBA) has sued the Office of the Comptroller of the Currency (OCC), arguing that the regulator exceeded its legal authority by granting national trust-bank charters to crypto firms.

In its federal court complaint, the banking group argues that the National Bank Act does not authorise the OCC to use national trust charters to give crypto companies access to the US banking system. The ICBA also says these firms are not subject to the same capital, liquidity, supervision and deposit insurance requirements as community banks, putting smaller institutions at a competitive disadvantage.

ICBA is asking the court to declare the charters unlawful and prevent the OCC from approving them for crypto firms whose activities extend beyond traditional trust services. The group argues that companies seeking to engage in broader banking activities should instead obtain full-service bank charters subject to the corresponding regulatory requirements.

The lawsuit comes as crypto companies increasingly pursue national trust charters to provide regulated financial services. These firms generally do not offer traditional cash deposit accounts, distinguishing their business models from those of community banks and the deposits for which Federal Deposit Insurance Corporation (FDIC) insurance is designed.