The largest trade group for American community banks sued the Office of the Comptroller of the Currency on Friday, asking a federal court in Washington to stop the regulator from granting national trust bank charters to cryptocurrency companies.
The Independent Community Bankers of America filed the complaint under the Administrative Procedure Act in the U.S. District Court for the District of Columbia. It targets a final rule the OCC adopted on March 2 and Interpretive Letter No. 1176, guidance dating to January 2021, and asks the court to declare both unlawful, the group said. The suit also names the comptroller of the currency, Jonathan Gould, in his official capacity, according to a report on the filing.
The fight is over the national trust charter, once a quiet corner of banking law used by custodians, which the ICBA says the OCC has stretched into “a side door into the banking system for crypto firms.”
Rebeca Romero Rainey, the group’s president and chief executive, said letting companies use the charters to conduct substantial non-fiduciary activities “exceeds the authority Congress granted the agency.” Such firms, she said, gain the credibility of a federal bank charter without the obligations that bind insured banks: Community Reinvestment Act duties, consolidated supervision, capital and liquidity standards and FDIC insurance.
There is a consumer gap as well, Ms. Romero Rainey said. Digital assets held at a crypto firm operating under a trust charter don’t carry the federal protections customers expect from a chartered bank, yet the charter preempts many state consumer-protection laws while the entity is regulated more lightly than a traditional bank.
The complaint also asks the court to vacate the conditional charter granted to Protego Holdings in February, which the ICBA opposed over what it called the firm’s governance and risk-control shortcomings. In its announcement, the group said the OCC never answered its objections about separating banking from commerce, the company’s flawed risk structure and potential harm to consumers. “They are thus at serious risk of failure if the volatile cryptocurrency market crashes,” the group said in the lawsuit, according to American Banker. “And the OCC’s untested receivership framework would struggle to resolve an uninsured institution of Protego’s and other crypto companies’ proposed scale and complexity.”
The suit lands as digital-asset companies line up at the regulator’s door. The OCC has cleared or drawn applications from Circle, Ripple, Paxos, Fidelity, BitGo, Payward, the parent of the Kraken exchange, Jack Dorsey’s Block and World Liberty Financial, a company tied to President Trump and his family.
Senator Elizabeth Warren, Democrat of Massachusetts, has separately called the charter approvals illegal, a charge the industry has disputed.
The OCC is separately racing to finish rules for stablecoin issuers under the GENIUS Act by November. The ICBA case now gives the agency a courtroom fight over how far it can open the banking system to crypto before those rules even arrive.