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The fight between banks and the cryptocurrency industry is unlikely to end anytime soon.
Source: ICBA Under the Donald Trump administration, the Office of the Comptroller of the Currency has granted conditional national trust bank charters to several crypto and fintech firms.
These include Ripple, The approval allows the firms to provide asset custody and settlement services nationwide. However, it exempts them from FDIC insurance for consumer deposits. For ICBA, this exemption allows crypto firms to enter the banking system under ‘lightly regulated national charters’ rather than more rigorously regulated traditional bank charters. For the group, this is unfair competition to community banks, and the uninsured national bank charters could spread financial market instability.
As such, the ICBA sought the court to vacate the “Final Rule” and Interpretive Letter 1176, which gave the OCC sweeping powers to charter national trust banks. The fight between the bank and the crypto industry has been going on for a while. It was evident in the stablecoin yield debate and eventually the stalling of the CLARITY Act. Similarly, the banking sector has been publicly opposed to the OCC’s national bank charter approvals.
In May, Senator Elizabeth Warren and other Democrats joined the opposition to the OCC’s approvals. OCC’s Jonathan Gould also rejected the banks’ claims, noting that his “job is not about incumbent protection. ” So, even though the lawsuit was not surprising, it marks a new escalation in the turf war between the two industries. It’s almost like everything we said about the bank trades just wanting to protect their fiefdoms at the expense of protecting American consumers was true.
It remains to be seen how the lawsuit will pan out. Some policy watchers believe the update could stall the recent SEC push to modernize But this could also be a tough balancing act for the U.S. government. On one end, it has to deal with an incumbent who wants to protect its turf.
On the other hand, it would like to nurture and scale stablecoins to fill in the demand gap for Treasury bills. Banks want the court to stop and reverse the OCC’s national bank trust charter approvals to crypto firms. AMBCrypto was founded in 2018 with a mission to simplify and bring the latest blockchain and cryptocurrency news to our readers.
We have quickly grown into the digital news source for an emerging generation of cryptocurrency enthusiasts, reaching more than a million readers on a monthly basis, across the globe.
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