US Banking Groups Urge OCC to Pause Crypto Trust Bank Charters

US banks want OCC to delay crypto trust approvals until full business plans are shared with the public.

Ripple and Circle face opposition over trust bank bids that lack traditional fiduciary responsibilities.

Banks warn that granting crypto charters may weaken oversight and create unfair advantages for non-bank firms.

Top American banking trade groups are urging the Office of the Comptroller of the Currency (OCC) to halt approvals of national trust bank applications submitted by crypto firms. Ripple Labs and Circle Internet Financial are among the companies seeking federal trust bank charters. These licenses would allow them to provide custodial and payment services under national oversight.

The American Bankers Association, America’s Credit Unions, and others submitted a letter on July 17 asking the OCC to pause decisions. They believe the applications lack full disclosure and could reshape long-standing banking policy.

Concerns Over Fiduciary Standards

According to the letter, Ripple and Circle’s proposed trust banks do not meet traditional fiduciary requirements. The applicants intend to offer custodial and stablecoin-related services, which the banks argue fall outside the scope of standard trust bank operations.

Traditional trust banks typically perform fiduciary duties such as estate or asset management. The banking groups assert that approving these crypto applications could allow firms to bypass these obligations. They also fear that payment services and asset custody could become the main criteria for trust bank approvals.

Potential Regulatory Loopholes

Banking associations warn that these applications may open a loophole. This shift could permit non-banks to access the privileges of national bank charters. However, they may not be subject to the same oversight and capital requirements as conventional banks.

The groups also stress the need for public input before the OCC changes precedent. They say a transparent process is essential when evaluating business models that introduce new risks to the financial system.

The letter argues that allowing such firms to operate under national charters without clear fiduciary activity could trigger a broader policy issue. The result, they suggest, may weaken regulatory safeguards designed to protect the public.

Stablecoin Law Creates Incentives

The recent GENIUS Act, which introduced a stablecoin framework, is adding urgency to these applications. Under the new law, stablecoin issuers must follow strict licensing rules. However, the law limits their services to stablecoin issuance only.

By securing a national trust charter, firms like Ripple and Circle can offer broader services. This includes issuing stablecoins and managing crypto assets under one license. Doing so would eliminate the need for multiple state-level licenses.

Banking groups worry this could encourage more crypto companies to seek similar status. They believe it would create uneven regulatory obligations across the financial sector.