US banking and credit union associations including the American Bankers Association have formally urged the Office of the Comptroller of the Currency (OCC) to delay making decisions on national bank charter applications from crypto companies. They argue that these applications lack enough detail, with potentially significant implications for financial regulation and stability.

They’re worried that approving these charters would mark a sharp policy shift. The filings so far haven’t clearly shown whether the applicants plan to carry out traditional fiduciary functions typically expected of trust banks. And without clarity, the public can’t offer meaningful feedback before decisions are made.

Why This Matters

Right now, crypto firms such as Circle, Ripple, and Fidelity Digital Assets are seeking national trust bank charters. If approved, they’d gain the ability to self-regulate federally, settle payments instantly, and operate coast to coast.

The lobby groups argue custodial services for digital assets fall outside the scope of traditional fiduciary roles. Granting charters under these circumstances would represent a big departure from OCC policy. Worse, it could open the door for other non-bank companies to follow suit, raising risks to the broader financial system.

The Pushback from the Crypto Side

Industry figures are already pushing back. Caitlin Long, founder of Custodia Bank, called the letter an interesting reaction on X, saying any attempt to constrain trust charters through OCC actions could end up in court. She also pointed out that if traditional banks are concerned about lighter capital standards for trust entities, they could simply convert to trust companies themselves with much lower regulatory burdens.

Alexander Grieve from Paradigm noted that banks and credit unions usually disagree on almost everything, but in this case, they’re united because they’re facing competition from crypto.

What’s Driving Crypto Firms to Apply

Another catalyst is the recently passed GENIUS Act, which introduced a new stablecoin licensing framework. Under the act, stablecoin issuers would need additional state money-transfer licenses to operate nationwide. That makes a national trust bank charter more attractive, since it would allow crypto companies to combine stablecoin issuance with broader banking services including payments without applying separately in each state.

Winston & Strawn attorney Logan Payne explained that even with a GENIUS Act license, stablecoin firms still face hurdles. That makes a trust charter ideal for expanding activities under one national regulatory roof.

What This Really Means

Here’s the thing: this debate goes beyond crypto. It’s about who gets to be a bank, and what being a bank actually entails. If, say, Ripple or Circle is granted a national trust charter, it could reshape where financial power and responsibility lie. It would allow these firms to offer instant payments, nationwide services, and bypass the patchwork of state licensing.

On the flip side, the banking lobby suspects it’s a strategic move to leap straight into the regulated banking world with lighter oversight. They want to slow things down until full details are public and the implications for policy and competition are clear.

The Road Ahead

We’re probably headed for more back and forth. Banks will push for transparency. Crypto firms and their proponents will likely litigate if OCC signals it’s ready to say yes. And with the GENIUS Act pushing companies toward federal charters, more crypto players may file applications.

Also expect stronger calls for public notice, meaningful comment periods, and perhaps even congressional hearings. This could be just the start of a wider regulatory showdown.