Five banking industry associations have petitioned the Office of the Comptroller of the Currency to halt its review of the national trust charter applications filed by crypto companies Ripple, Circle, Protego Holdings and Fidelity.
These companies, along with payments company Wise and Erebor, a de novo bank that would serve crypto and tech companies, have all applied to the OCC for bank charters in recent months.
Most of these applications are for a national trust charter, a license that allows a company to operate as a limited-purpose national bank with trust powers. This means the company can perform fiduciary activities like managing assets, administering trusts and acting as a trustee or custodian. Ripple has also applied for a master account at the Federal Reserve, which would give it direct access to the Fed’s payment system. The companies have previously declined requests for comment on these charter applications.
The banking groups — the American Bankers Association, the Consumer Bankers Association, the National Bankers Association and the Independent Community Bankers of America — say not enough information has been provided about these charter applications to allow for “meaningful public scrutiny.”
They also say any changes to the OCC’s policies on trust activities require more deliberation.
“With a lack of public information or public input, the OCC’s approval of the Applications would raise significant policy and process concerns,” the groups said in a joint letter to five OCC officials.
The banking groups are seeking more information about the proposed national trust banks’ business plans and details about the kinds of crypto services they intend to offer. Their letter expresses concern that the new trust banks would provide traditional banking and payment services, contrary to the OCC’s policy on trust banks.
“Providing custodial services for digital assets is not a fiduciary activity, and granting charters where traditional fiduciary activity is absent — or, is secondary at best — would represent a significant change in OCC policy that should be made only pursuant to a proper public notice and comment period,” the letter stated.
Individual community bankers have also expressed dismay at the idea of crypto rivals becoming national trust banks or receiving industrial loan charters from the FDIC. They worry that deposits will flow out of their banks and into stablecoins. They also feel that letting these companies be part of the banking system brings risk, and they don’t like the idea of crypto companies potentially obtaining Fed master accounts.
“When the Treasury Secretary says there’s going to be $3 trillion of stablecoin money, where do you think that’s coming from?” said a community banker in the Midwest. “That just comes out of the banking system, 100%.”
Bank charters for crypto companies should have stiffer requirements, the banker said, such as five years of proven profitability and a full stack of existing products and services. The ILC charter could be a good fit, she indicated.
“An ILC doesn’t have to look the way it did in the past,” she said. “It could have meat and bones to it.”
