Community banks sue OCC over trust bank charters of crypto firms

The Independent Community Bankers of America brought suit against the Office of the Comptroller of the Currency in federal court in Washington, D.C., asserting that the regulator has gone beyond the powers granted by Congress by permitting cryptocurrency companies to obtain limited national trust bank charters. The ICBA contends those charters allow crypto firms to gain the credibility associated with a federal bank charter while avoiding regulatory obligations that apply to insured depository institutions.

ICBA president and CEO Rebeca Romero Rainey said the national trust charter was not intended to serve as a "side door" into the U.S. banking system for crypto companies. The group specifically cited lack of Community Reinvestment Act responsibilities, absence of consolidated supervision, and exemptions from capital and liquidity standards and FDIC insurance as shortcomings of the trust-charter pathway.

Under the Trump administration and OCC Comptroller Jonathan Gould, the agency has approved or conditionally approved multiple trust-charter applications from crypto firms seeking to broaden service offerings in the United States, according to prior reporting. Those limited trust charters, however, do not permit charter holders to take deposits or make loans, a distinction the OCC and others have noted in discussions of charter scope.

The ICBA is asking the court to reinstate what it views as the statutory limits on the OCC's authority. The OCC had not provided a comment to the reporting outlet by the time the article was published.