ICBA sues OCC over crypto bank charters and March 2 trust rule

The Independent Community Bankers of America has sued the Office of the Comptroller of the Currency, arguing that the regulator let cryptocurrency firms enter the banking system without the same scrutiny that applies to community banks. For high-risk payment and banking players, the fight is about whether a national trust charter can function as a faster route into regulated banking without the usual capital, liquidity, CRA, and FDIC insurance baggage.

1. According to a Friday, October 2 press release from ICBA, the lawsuit targets the OCC’s March 2 final rule tied to Interpretive Letter No. 1176. ICBA says the rule and the guidance give the OCC new powers to charter national banks that are not authorized by the National Bank Act.
2. The association asked a federal court to declare both the final rule and the letter unlawful. In practice, that is a direct challenge to the OCC’s ability to use the national trust bank charter as a path for firms whose core business is not traditional fiduciary activity.
3. ICBA President and CEO Rebeca Romero Rainey said the OCC’s decision to allow companies to obtain national trust bank charters for “substantial non-fiduciary activities” exceeds Congress’s authority grant. She added that Congress did not create the national trust charter as “a side door into the banking system for crypto firms” seeking federal charter credibility without Community Reinvestment Act obligations, consolidated supervision, capital and liquidity standards, and FDIC insurance.
4. The OCC did not immediately reply to PYMNTS’ request for comment. When it issued the National Bank Chartering final rule, the OCC said it was only clarifying the longstanding authority of national banks limited to the operations of trust companies and related activities to engage in non-fiduciary activities alongside fiduciary ones, and that the rule would neither expand nor contract the agency’s authority to charter a national bank.
5. The Bank Policy Institute also weighed in, but from the other side of the same basic point: novel entities should be subject to the same scrutiny as other chartered institutions. Paige Pidano Paridon, executive vice president and co-head of regulatory affairs at BPI, said in a Friday statement that BPI supports bringing new products and services into the regulated banking ecosystem, provided the entities are subject to the same rules and responsibilities as every other chartered institution engaging in the same activities.