By Bankero staff
Crypto companies are getting bank charters in the United States. Traditional banks are asking: Why don’t they have to play by the same rules?
A group representing US community banks has sued a federal regulator over its decision to make it easier for cryptocurrency and fintech firms to obtain limited national bank charters.
The Independent Community Bankers of America (ICBA) argued that the Office of the Comptroller of the Currency (OCC) went beyond its legal authority by opening the door to national trust bank charters for crypto firms.
The licenses can give crypto companies some of the advantages and credibility that come with federal oversight. They allow firms to hold and manage assets for customers and settle payments more quickly. But they are not full-service bank licenses.
Companies operating under the charters cannot accept ordinary cash deposits or make loans, and digital assets they hold do not necessarily come with the same protections consumers may expect when dealing with a federally chartered bank.
That’s where traditional banks see a problem.
“American consumers reasonably expect a federally chartered bank to carry federal protections,” ICBA President and CEO Rebecca Romero Rainey said.
She argued that crypto firms seeking the benefits of a federal charter should be required to meet the same standards imposed on community banks.
The OCC declined to comment on the lawsuit.
Same charter, different rules? Under President Donald Trump, US regulators have granted several national trust bank charters to companies primarily involved in crypto and other financial technology businesses.
The ICBA, whose members typically have less than $10 billion in assets, argues that the OCC is giving these firms the legitimacy associated with being federally chartered without subjecting them to all the safeguards and regulatory burdens faced by conventional banks.
It wants a federal court in Washington to order the OCC to withdraw the rule and related guidance that made it easier for crypto firms to seek the charters.
The case boils down to an increasingly important question as crypto moves deeper into mainstream finance:
How much of a bank should a crypto company be allowed to become without being regulated like one?
– With a report from Reuters
