The American Bankers Association (ABA) is facing sharp backlash after urging regulators to halt the issuance of banking licenses to leading crypto firms Ripple and Circle. Prominent attorney John Deaton launched a fierce response, accusing the ABA of “obstruction and sabotage” against innovation in the financial sector.


Crypto Industry Fights Back: Deaton Demands Fair Access

In a strongly worded post on X, Deaton criticized the ABA’s letter to the Office of the Comptroller of the Currency (OCC), which called for a freeze on granting trust charters to digital asset companies. His stance was echoed by well-known tech analyst Vincent Van Code, who labeled the move “anti-competitive and regressive.”

“The age of financial elites is over. A new era of decentralization is here,” Van Code stated.

“If democracy means anything in the economy, the voices of millions of crypto supporters must be heard.”

Ripple is seeking a national banking license from the OCC to deepen the integration of its stablecoin and payment services into the mainstream financial system. Similarly, Circle has applied to operate as a national trust bank, with its USDC reserves partially held by a new entity called First National Digital Currency Bank.


ABA Argues: No Fiduciary Activity, No License

According to the ABA, national trust charters should only be issued to institutions that provide fiduciary services — the traditional management of assets for others. In its letter to the OCC, the group argued that Ripple and Circle do not meet these criteria but seek the advantages of federal banking status.

The letter warned that approving such charters could set a dangerous precedent, allowing non-fiduciary crypto firms to bypass the Bank Holding Company Act and other rules that traditional banks must follow. It also voiced concerns about a wave of imitators following Ripple and Circle into the banking system without equivalent oversight.


GENIUS Act Aligns With Crypto Expansion

This dispute unfolds as the U.S. recently passed the GENIUS Act, which requires stablecoin issuers to operate under federal supervision — whether as banks, credit unions, or specially chartered nonbanks regulated by the OCC. For Ripple and Circle, obtaining such licenses would help meet compliance standards and expand their offerings.


A Clash of Worlds: Tradition vs. Innovation

The ABA is pushing for a strict return to narrow definitions of fiduciary duty and rejects the OCC’s prior, now-revoked Interpretive Letter 1179 that had allowed broader interpretations. Their position is simple: “No fiduciary duty, no trust charter.”

Critics argue that the ABA is merely trying to protect outdated financial models from being disrupted by modern, efficient technologies.

John Deaton summed it up bluntly: “By blocking Ripple and Circle, the ABA is only defending the old guard. But innovation always finds a way.”

#Ripple , #Circle , #crypto , #Regulation , #Stablecoins

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