A major fight is brewing between traditional U.S. banks and crypto companies.
On July 17, 2025, a group of powerful banking organizations including the American Bankers Association (ABA) asked U.S. regulators to pause the approval of banking licenses for big crypto firms like @Circle USDC , @Ripple Network , and Fidelity Digital Assets.
They sent a letter to the Office of the Comptroller of the Currency (OCC), saying that giving crypto companies a banking license would break traditional banking rules and put the U.S. financial system at risk.
Why Are Banks Worried?
The letter explains that crypto companies don’t work like traditional banks. They don’t offer core services like handling estates or acting as trustees. Banks also say crypto firms haven't shared enough details about their operations, making it hard for regulators to judge them properly.
They’re asking for a public review process, where everyone can give feedback before any approval is given. Banks fear that if crypto companies get these licenses easily, more non-traditional firms will follow, which could destabilize the financial system.
Regulators Still Cautious About Crypto
Earlier this year, the OCC gave some clarity on crypto. On March 7, it said that national banks could hold crypto assets, use stablecoins, and take part in blockchain networks, but only under strict rules.
Then, on July 14, the OCC and other regulators warned banks about the risks of holding crypto, urging them to improve their risk management.
These moves show that while regulators are open to crypto, they are still very cautious.
New Law Heats Up the Debate
At the same time, the GENIUS Act was signed into law on July 17. It allows stablecoin companies to apply for national bank charters. This means they wouldn’t need state licenses and could expand more easily.
Crypto supporters welcomed the law. But it added to the concerns of banks, who now see more crypto firms trying to enter their space.
Caitlin Long, founder of Custodia Bank, said that some of these charters could act like real bank licenses, but with fewer rules and less capital required. This could lead to legal battles.
Paradigm, a crypto-focused firm, posted on X that banks and credit unions are clearly afraid of crypto competition.
What’s Next?
The OCC must now decide: Should crypto companies be treated like real banks?
If the OCC delays or denies these applications, it could hurt the crypto industry’s efforts to become part of the mainstream financial system. But approving them could increase competition and encourage innovation while raising risks to the financial system.
This growing battle shows how crypto is forcing big changes in banking. As crypto firms push for legitimacy, traditional banks are fighting to protect their position.
The future of finance in the U.S. might depend on how this conflict plays out.
Image Source: COIN BUEARU
