American banks ask OCC to block crypto banking licenses

Five U.S. banking trade associations are demanding that the Office of the Comptroller of the Currency (OCC) freeze all pending trust bank applications from crypto firms like Circle and Ripple, warning the agency that approving these charters would blow up decades of regulatory precedent.

In a joint letter sent to the OCC, the American Bankers Association, America’s Credit Unions, Consumer Bankers Association, Independent Community Bankers of America, and National Bankers Association argued that these applications lack transparency and pose serious legal risks to the banking system.

According to the associations, national trust bank applications from National Digital Trust Co, Fidelity Digital Assets, First National Digital Currency Bank, and Ripple National Trust Bank all fail to meet the standard for public review.

The associations said the public-facing parts of the filings are so vague that they can’t be reviewed meaningfully. They also argued that issuing these charters would amount to a quiet overhaul of how trust powers are regulated; without public input, without comment, and without proper oversight.

Banking groups challenge legal basis for crypto trust charters

The core of their complaint centers on the legal framework for trust banks. The groups stressed that national trust banks have always been limited to fiduciary services, things like managing estates or acting as trustees, under 12 U.S.C. § 92a.

What Circle, Ripple, and the others want, they say, is access to federal banking benefits without being actual fiduciaries. The letter says that using § 27(a) to charter crypto firms that don’t do fiduciary work “would be a loophole” and would let these companies dodge the Bank Holding Company Act and other rules regular banks have to follow.

Under current OCC policy, custody of crypto doesn’t count as a fiduciary activity. Even if state laws say trust companies can hold crypto assets, federal law doesn’t recognize that as fiduciary unless it’s tied directly to estate or trust management.

The associations wrote, “Providing custodial services for digital assets is not a fiduciary activity,” and said granting charters to crypto companies based on custody alone would be a direct break from OCC precedent.

They also cited the now-rescinded Interpretive Letter 1179, which gave the OCC broad power to decide what counts as fiduciary on a case-by-case basis. That letter came after Letter 1176, which allowed the OCC to approve crypto custody under trust charters without public comment.

The groups said that was an unacceptable change to federal banking law. They’re now demanding that the OCC restore a consistent, transparent standard: no fiduciary activity, no trust charter.

Lobbyists warn OCC of systemic risk and copycat firms

The five groups warned that if these crypto applications go through, dozens of other companies will follow. They argued that letting Ripple or Circle operate as trust banks without offering real fiduciary services would create a backdoor into the federal banking system.

That, they said, would create “material risk” for the broader U.S. economy. The lobbyists’ letter reminded the OCC that the banking powers under 12 U.S.C. § 24 (Seventh) were never meant for trust banks. They also pointed out that allowing crypto firms to use § 27(a) for non-fiduciary work would effectively gut the purpose of having trust bank charters in the first place.

If approved, the associations said, the OCC would be setting a precedent that lets companies skirt regulation by calling themselves something they’re not.

None of this is happening in a vacuum. JPMorgan, the country’s biggest bank, is a member of all five associations behind the letter. And just one day before the letter went public, Tyler Winklevoss, co-founder of Gemini, went after JPMorgan yesterday, as Cryptopolitan reported.

“JPMorgan and the banksters are trying to kill fintech and crypto companies,” Tyler said. “They want to take away your right to access your banking data for free via third-party apps like Plaid and instead charge you and fintechs exorbitant fees to access YOUR DATA.”

Tyler also warned that the banks are suing the Consumer Financial Protection Bureau to overturn the Open Banking Rule created under Section 1033 of the Consumer Financial Protection Act, which gives Americans the right to use apps to connect to services like Gemini, Coinbase, and Kraken.

“This is the kind of egregious regulatory capture that kills innovation, hurts the American consumer, and is bad for America,” Tyler wrote. He ended his post accusing Jamie Dimon and his “cronies” of trying to sabotage President Trump’s mission to make the U.S. the global hub for crypto innovation. “We must fight back,” he wrote.

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