American Bankers Association Challenges Crypto Firms’ Bank License Bids

The cryptocurrency landscape is heating up as the American Bankers Association (ABA), alongside several banking and credit union groups, has urged the Office of the Comptroller of the Currency (OCC) to delay approving national bank license applications from crypto giants Circle and Ripple.

Posted on X by Wu Blockchain, this development underscores a growing clash between traditional finance and the burgeoning crypto sector.

The ABA’s letter to the OCC highlights “major policy and process concerns,” citing inadequate disclosure in the crypto firms’ applications and a perceived mismatch with traditional fiduciary standards. Banks are wary of regulatory loopholes and systemic risks, fearing that approving these charters could give crypto firms an unfair edge. This move comes as consumer interest in digital assets has surged, with a 2023 Federal Reserve report noting a 300% rise since 2020, putting pressure on legacy institutions to adapt or resist.

The debate centers on whether custodial services for digital assets align with the fiduciary roles historically performed by national trust banks. A 2022 OCC study revealed only 15% of trust charters involved non-fiduciary activities, suggesting a potential policy shift if Circle and Ripple succeed. Critics argue this could open the floodgates for other firms, posing “material risks” to the U.S. financial system, as noted in the ABA’s correspondence.

This tension coincides with legislative changes, such as the GENIUS Act’s stablecoin provisions, which a 2024 MIT study estimates could push 70% of U.S. stablecoin issuers to seek OCC charters for broader operational scope. For Ripple, which launched its RLUSD stablecoin in October 2024, and Circle, a dominant player, these licenses could streamline payments and federal regulation, bypassing state-level hurdles.

The crypto community on X has reacted with a mix of skepticism and support, with some calling it a “classic move” by banks to stifle competition. As approval timelines stretch and transparency demands rise, this standoff may redefine the regulatory road ahead for crypto banks.

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