Ripple’s move to launch a national trust bank is drawing fire for threatening to erode regulatory safeguards, destabilize the banking system, and blur core institutional boundaries.
Ripple’s Bank Ambitions Collide With Legacy Finance
The Independent Community Bankers of America (ICBA), which represents around 5,000 community banks across the country, has formally objected to Ripple Labs’ application to charter Ripple National Trust Bank (RNTB). In a detailed letter sent to the Office of the Comptroller of the Currency (OCC) on Aug. 4, ICBA argued that Ripple’s proposal to manage reserves for its RLUSD stablecoin strays far from the original purpose of national trust banks and effectively replicates core banking functions. ICBA warned:
This has the potential to drain deposits out of the banking system.
By offering RLUSD with dollar redemptions and payment utility, the group stressed that Ripple would effectively recreate the role of a deposit-taking institution—something legally restricted for trust banks.
ICBA emphasized that Ripple’s approach violates regulatory intent: “Ripple Labs and RNTB appear to be replicating a bank’s depository functions without obtaining a full bank charter.” The group also asserted that the OCC is permitting stablecoin issuers to bypass regulatory safeguards. In its letter, ICBA stated: “The OCC should not allow stablecoin issuers to use the national trust bank charter to benefit from full-service bank-powers without full-service bank-requirements. Stablecoins like RLUSD, which function similarly to deposits by enabling transfers, purchases, and dollar redemption, differ sharply from the custodial and fiduciary roles trust banks were designed for.”
The association further noted that the OCC had not followed formal rulemaking procedures required under the Administrative Procedure Act when expanding trust bank authorities to include non-fiduciary activities like stablecoin issuance.
Beyond legal concerns, ICBA flagged serious risks tied to digital assets and past regulatory violations by Ripple. “The cryptocurrency ecosystem is fraught with significant risks related to fraud, money laundering, and cybercrime, posing substantial challenges for any institution, such as RNTB, seeking to provide custodial services for digital assets.” The association also pointed to Ripple’s prior settlement over anti-money laundering lapses and its $125 million penalty for securities violations as grounds for denying the application. In its conclusion, ICBA warned:
Granting RNTB’s national trust bank charter would undermine the stability of the financial system by allowing a non-traditional institution to offer deposit-like services without adequate regulatory oversight, threatening consumer protections and the integrity of the banking sector.
Some in the blockchain industry argue that such institutions can modernize finance, but ICBA insists the risks outweigh any benefits without strict regulatory parity.
