Traditional Banks Push Back on Crypto Expansion
Major U.S. banking institutions are calling on federal regulators to halt the approval of national banking licenses for cryptocurrency companies. In a recent formal letter to the Office of the Comptroller of the Currency (OCC), the American Bankers Association and several other banking groups raised concerns over what they view as a “significant departure from current policy.”
The controversy surrounds crypto giants like Circle, Ripple Labs, and Fidelity Digital Assets, which have been seeking to gain banking charters, granting them the authority to operate as national trust banks. These firms argue that such licenses are crucial for expanding their services and complying with federal financial regulations.
Regulatory Loopholes or Legitimate Evolution?
Traditional banks claim that granting these charters to crypto firms would allow them to sidestep stringent capital requirements and bypass traditional fiduciary responsibilities expected of federally regulated institutions. The letter emphasizes that crypto firms’ business models often do not align with the fiduciary functions typically associated with trust banks.
The concern is not only about regulatory clarity but also about potential risks to the U.S. financial system. Banks warn that these new players could operate outside the conventional safety nets, leading to instability and reduced consumer protection in the long term.
Crypto Industry Fires Back
Unsurprisingly, the crypto community has reacted sharply. Caitlin Long, founder of Custodia Bank, questioned why traditional banks don’t adapt to the changing environment themselves:
“If they’re so concerned, why not become trust banks too?”
Alexander Grieve of Paradigm noted the unusual unity among banks and credit unions, stating,
“They rarely agree on anything—but on this, they’re united. Crypto competition is real.”
The call to action from the banking industry comes at a time of major political shifts. The recent GENIUS Act, signed by former President Donald Trump, outlines a framework for regulating stablecoin issuers, giving rise to increased efforts by crypto companies to secure federal charters. However, critics argue that the Act does not adequately address the multi-state compliance burdens, which make national banking licenses particularly attractive to digital asset firms.
Why OCC Licenses Matter
Under current law, most stablecoin issuers must acquire money transmitter licenses in each individual state to operate nationally. An OCC banking license bypasses this state-by-state hurdle, enabling a firm to offer services across the U.S. under a single regulatory framework.
According to Logan Payne, attorney at Winston & Strawn,
“Almost all U.S. stablecoin issuers operate beyond the scope of GENIUS Act’s new license. A national charter offers scalability.”
Conclusion: A Battle Between Finance Titans
This growing tension highlights a critical juncture in the future of American banking. On one side are legacy financial institutions, deeply embedded in the regulatory landscape. On the other, crypto innovators are pushing boundaries, seeking legitimacy and national reach.
Whether the OCC bows to banking pressure or clears the path for crypto firms could define the next era of financial innovation in the United States. As digital assets evolve from niche instruments to mainstream financial tools, the race for regulatory clarity—and dominance—is just getting started.
