U.S. Banking Group Sues OCC Alleging Overreach in Granting Trust Licenses

The Independent Community Bankers of America (ICBA) filed a lawsuit against the Office of the Comptroller of the Currency (OCC) in federal court on Friday, accusing it of exceeding its statutory authority in issuing national trust bank charters to cryptocurrency companies. The ICBA claims that the OCC is implementing a broad new power not authorized by the National Bank Act, allowing these companies to enter the U.S. banking system without the same level of regulatory oversight as community banks, putting small banks at a serious competitive disadvantage. The ICBA is one of the largest banking advocacy organizations in the U.S., primarily representing smaller institutions. Last month, the organization opposed the stalled Digital Asset Market Structure Bill in the U.S. Senate, arguing that its stablecoin provisions failed to protect community banks from direct competition for deposit accounts. ICBA President and CEO Rebeca Romero Rainey stated that Congress did not establish the national trust charter to provide a backdoor for cryptocurrency companies seeking to enter the banking system with the credibility of a federal bank charter, as these companies do not bear the same obligations regarding capital, liquidity, regulation, and Federal Deposit Insurance Corporation (FDIC) insurance requirements. The OCC has recently continued to issue trust charters to cryptocurrency companies, but these companies' business models differ from those of typical community banks, as they do not offer cash deposit accounts that require FDIC insurance. Approved institutions include cryptocurrency banks Protego and Erebor, as well as existing crypto firms like Coinbase, Circle, and Crypto.com.

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