ICBA Sues OCC Over National Trust Bank Charters For Cryptocurrency Firms: 15 outlets compared - NewsCord
The Independent Community Bankers of America (ICBA) filed a lawsuit against the Office of the Comptroller of the Currency (OCC) in the U.S. District Court for the District of Columbia on Friday, alleging the OCC exceeded its authority by granting national trust bank charters to cryptocurrency firms.
The Independent Community Bankers of America (ICBA) filed the suit Friday in the US District Court for the District of Columbia.
ICBA President and CEO Rebeca Romero Rainey said the OCC’s decision to allow companies to obtain national trust bank charters to conduct substantial non-fiduciary activities exceeds the authority Congress granted the agency.
The group argued that Congress did not create the national trust charter as a 'side door into the banking system' for crypto firms seeking the credibility of a federal bank charter without the Community Reinvestment Act obligations, consolidated supervision, capital and liquidity standards, and FDIC insurance.
ICBA also warned that 'Digital assets held at a crypto firm operating under a national trust charter do not carry those important safeguards,' and it said the group was asking the court to return the OCC to its statutory limits.
The lawsuit sought a court order to return the OCC to its statutory limits and to prevent the OCC from approving trust charters for crypto firms whose activities extend beyond traditional trust services.
Regulatory Dispute and Competitive Concerns
ICBA argued that crypto trust charters let cryptocurrency firms enter the U.S. banking system without being subject to the same level of regulatory oversight faced by community banks, creating a 'severe competitive disadvantage.'
Congress did not create the national trust charter as a 'side door into the banking system' for crypto firms seeking the credibility of a federal bank charter without the Community Reinvestment Act obligations, consolidated supervision, capital and liquidity standards, and FDIC insurance.
Digital assets held at a crypto firm operating under a national trust charter do not carry those important safeguards, and it said the group was asking the court to return the OCC to its statutory limits.
The Bank Policy Institute executive Paige Pidano Paridon said BPI supports bringing innovative products into the regulated banking ecosystem, provided that the entities engaging in those activities are subject to the same rules and responsibilities as every other chartered institution.
Paridon added that companies should not receive trust charters unless they plan to limit their operations to genuine trust activities, and she said that if they want to engage in traditional banking activities, they should seek full-service banking charters.
Background on Approved Trust Banks
The lawsuit described the OCC as having approved, conditionally or otherwise, 21 trust banks during the Trump administration, and it said at least 13 of those banks are crypto companies.
According to the filing, the OCC has approved, conditionally or otherwise, 21 trust banks during the Trump administration.
The complaint specifically called out the approval of an application from Protego Holdings Corporation, and it warned that the ICBA said the firms were at serious risk of failure if the volatile cryptocurrency market crashes.
The case also centers on the OCC’s March 2 final rule related to Interpretive Letter No. 1176, which ICBA said attempted to provide the OCC with new powers to charter national banks that are not authorized by the National Bank Act.
