As crypto giants such as Circle and Ripple actively apply for banking licenses, U.S. banks and credit union groups recently jointly asked the U.S. Office of the Comptroller of the Currency (OCC) to put the brakes on the process, arguing that crypto companies do not have the ability and experience to operate fiduciary businesses. They stressed that more information should be disclosed first, otherwise hasty approval could lead to unfair competition and shake the existing financial order.
Crypto companies want to get trust bank licenses? Traditional financial institutions express concerns
Well-known crypto companies such as stablecoin issuer Circle, Ripple, and Fidelity Digital Assets under Fidelity have recently applied to the OCC for a "National Trust Bank Charter" in an attempt to legally provide digital asset custody, asset planning and other trust services under federal supervision.
If they successfully obtain authorization, it means that they will skip state-level restrictions and be able to operate directly across the United States, with greater regulatory approval and legal stability.
(Circle wants to be a bank too? What is the purpose of the OCC's national trust bank charter?)
However, this sudden banking trend seems to have made the traditional financial industry uneasy. The American Bankers Association (ABA), together with the Credit Union Association (America’s Credit Unions), the Consumer Bankers Association (CBA), the Independent Community Bankers Association (ICBA) and the National Bankers Association (NBA), jointly issued an open letter to the OCC, explicitly requesting regulators to suspend the review of such applications:
The business model of crypto companies "lacks fiduciary duty", and if it is passed rashly, it will be a fundamental deviation from the OCC's long-standing policy.
Banking groups are concerned: Crypto companies have no ability and experience and should not be held to the same standard
The banking industry first pointed out that most of the application materials of these crypto companies lack key details, are incomplete and not public, making it difficult for the public to fully understand their risks, scope of operations and regulatory impact. The biggest controversy is: "Does digital asset custody constitute a fiduciary duty?"
They stressed: "The business of crypto companies such as Circle or Ripple is mainly digital asset custody, which does not constitute fiduciary activity, and they do not have the rights, obligations and experience to actively manage, invest or operate assets."
The above-mentioned applicant companies do not have the intention or ability to engage in core trust business consistent with trust banks, and even mix business models such as custody and trading, stablecoin issuance, and interest income, which are fundamentally different from traditional trust principles and should not and are not suitable to obtain equivalent qualifications.
At the same time, the banking industry is also worried that this move may lead to a copycat effect and cause unfair competition:
If these crypto companies can obtain the same license and status as traditional trust banks without the ability to operate trust business and with low capital requirements (10%-15%), the compliance costs and capital structure of traditional banks will face unfair competition. If other non-bank institutions follow suit, it may undermine the consistency of supervision and pose systemic risks to the financial system.
They warned that this would be a fundamental departure from long-standing OCC policy and could not be rushed into without public review.
Crypto practitioners fight back: Banks are not afraid of risks, but competition
There has also been a lot of backlash in the crypto space. Caitlin Long, founder of Custodia Bank, pointed out that the controversy is actually an anxiety about differences in capital thresholds:
Traditional banks are worried that if trust banks can provide similar services at a lower capital cost, why should traditional banks bear the capital scale requirements and high regulatory pressure?
Alexander Grieve, head of government affairs at crypto venture capital firm Paradigm, also sarcastically said: "Banks and credit unions rarely agree on anything, and it seems that they are finally feeling the competitive pressure from the crypto industry."
Financial boundaries are being redrawn: Crypto companies want a national pass approved by the OCC
Although the trust bank licenses currently approved by the OCC do not cover the deposit and lending functions of traditional banks, they allow businesses to operate at the federal level, eliminating the hassle of applying for licenses state by state and establishing a higher trust threshold for institutional investors.
If Circle can obtain the license, it will be able to manage its USDC reserves itself without the need for third-party custody, and can also expand its upstream businesses such as digital asset trusts; Ripple hopes to further bring its stablecoin RLUSD under dual supervision by the federal and state governments, and apply for a Federal Reserve master account (Master Account) to deposit reserves directly into the Fed to enhance transparency and reserve security.
Faced with increasingly stringent stablecoin regulatory bills (such as the GENIUS Act), industry players hope to obtain OCC licenses, integrate more financial businesses, and establish a compliance reputation in the United States and around the world.
Today, financial boundaries must be clearly demarcated. Traditional banks want to maintain their past privileged barriers, while crypto companies want to gain equal access. In the coming months, the OCC will conduct public comments and internal evaluations on the above applications.
This is not only a test of the compliance capabilities of crypto companies, but also an important test of the openness and innovation of the U.S. financial system.
(The three major US regulators jointly released crypto custody guidelines: the entry route for banks is clearer)
This article US banking industry requests to postpone approval of trust bank licenses for crypto companies: it may shake financial stability first appeared in Chain News ABMedia.
