The Office of the Comptroller of the Currency’s (OCC) recent approvals of national trust bank charters for cryptocurrency firms have drawn sharp criticism from major U.S. banking groups and advocacy organizations.
Banking trade associations including the American Bankers Association (ABA), America’s Credit Unions, the Bank Policy Institute (BPI) and the Independent Community Bankers of America (ICBA) contend that the charter approvals depart from the historical remit of national trust banks.
They argue the model proposed by crypto firms focuses on custodial and payment services rather than traditional fiduciary activities, a distinction they say was highlighted in a joint letter to the OCC. “Providing custodial services for digital assets is not a fiduciary activity,” the letter states, challenging whether the applications meet the long‑standing statutory criteria for trust banks.
Critics also warn of regulatory arbitrage. They say charters granted on the basis of digital custody or payment intermediation could allow crypto firms to operate with lighter capital requirements and fewer public‑interest obligations than commercial banks.
Caitlin Long, founder of Custodia Bank, encapsulated this concern: “If what they fear will happen ends up happening, then why wouldn’t banks just convert to trust companies and keep their existing businesses at a small fraction of the capital requirements and regulations?” The worry is that a migration toward lower‑regulated entities would erode capital buffers across the system and incentivize business structures that increase systemic fragility.
Banks’ case against OCC crypto charters
Opponents highlight concrete compliance gaps they associate with these charters. Several groups urged the OCC to reject applications from prominent firms such as Coinbase, Circle, Ripple and Paxos on the grounds that allowing them to offer payments and custodial services as national trust banks could sidestep state oversight and obligations like the Community Reinvestment Act (CRA). The National Community Reinvestment Coalition (NCRC) described such charters as a potential “regulatory shortcut” that would create uneven competitive conditions.
A central operational concern is the absence of deposit insurance for many crypto custody models, which critics say increases consumer exposure. There are also flagged weaknesses in anti‑money‑laundering (AML) and know‑your‑customer (KYC) practices if oversight is not as robust as for traditional banks.
Regulators have issued interpretive guidance allowing certain bank crypto activities—such as custody, intermediation on a riskless‑principal basis, and handling network fees—intending to place some digital‑asset functions within the banking perimeter. This regulatory intent is viewed by opponents as insufficient to close the perceived gaps.
US banking groups present a consistent case that current OCC charters could weaken oversight, create competitive distortions, and raise consumer risks if not paired with commensurate capital and public‑protection measures.
