US Banks Warn OCC Crypto Charters Could Weaken Financial System Stability

TLDR

• US banking groups oppose OCC’s approval of crypto charters, citing regulatory risks.
• ABA and ICBA warn OCC’s crypto charter move could undermine the banking system.
• OCC’s approval allows crypto firms to avoid FDIC coverage and full regulations.
• Bankers fear OCC’s crypto charter move could create a two-tier banking system.

On December 12, 2025, the Office of the Comptroller of the Currency (OCC) granted national trust charters to five digital asset firms. This includes well-known names in the crypto industry such as Ripple, BitGo, and Fidelity.

These approvals, however, have sparked strong opposition from major US banking groups, who argue that the move could weaken the country’s financial system. The American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) raised concerns about the potential risks associated with the OCC’s decision.

Concerns Over Regulatory Gaps

The ABA and ICBA have criticized the OCC for creating what they view as a two-tier banking system. These banking groups argue that the digital asset firms, while granted national charters, are not subject to the same stringent capital, liquidity, or insurance requirements as traditional banks.

The lack of Federal Deposit Insurance Corp. (FDIC) coverage for these crypto firms is one of their primary concerns. In their view, this could create confusion among consumers, who might struggle to differentiate between insured banks and these new chartered firms.

In a statement, Rob Nichols, President of the ABA, emphasized that the new charters “blur the lines” of what constitutes a bank. He further expressed concerns that this could undermine the integrity of the national banking system by permitting entities to call themselves banks without the full set of regulatory obligations. As these digital asset firms become part of the banking system, there are fears they might operate in ways that could lead to instability in the broader financial system.

Potential for Regulatory Arbitrage

Another significant concern from banking groups is that the OCC’s decision may encourage regulatory arbitrage. By securing national trust charters, crypto firms could bypass state-level regulations, particularly laws governing money transmitters. At the same time, they would avoid compliance with the full set of regulations that apply to traditional, FDIC-insured banks.

This situation could lead to a regulatory environment where some financial entities are held to higher standards than others, potentially placing traditional banks at a competitive disadvantage.

Rebeca Romero Rainey, President of the ICBA, also expressed concern over the OCC’s guidance, which allows these trust banks to engage in activities such as stablecoin custody. She described the policy shift as a “dramatic policy change” that departs from the historical role of trust companies. Rainey argued that the OCC’s decision could result in regulatory inconsistencies and potentially compromise the stability of the financial system.

Consumer Protection and Systemic Risks

Beyond concerns about competition, the banking groups are worried about consumer protection and the ability of regulators to manage a potential failure of these new chartered firms. Given that digital asset firms will be handling significant volumes of assets without the safety net of FDIC insurance, there are questions about how regulators would manage a failure of one of these firms. The fear is that such a failure could leave consumers vulnerable and create chaos in the market, particularly if billions of dollars in assets were involved.

The OCC, however, has defended its decision, noting that these crypto firms underwent the same “rigorous review” as any other applicant for a national bank charter. The agency maintains that these firms are subject to oversight and will have to comply with various federal requirements. Despite this, many within the banking industry remain skeptical of the OCC’s ability to manage these entities under the current regulatory framework.

A Call for a Pause on Crypto Charters

In light of their concerns, both the ABA and ICBA have called for an immediate pause in the approval process for such charters. The groups argue that the current system is not equipped to handle these new entities and that the OCC should reconsider its stance before granting further approvals. They stress the importance of ensuring that all financial institutions operate under a consistent regulatory framework to avoid systemic risks.

The debate over the OCC’s decision is ongoing, with the banking groups urging policymakers to carefully examine the long-term consequences of integrating crypto firms into the traditional banking system.

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