Banking lobby urges OCC to address risks around crypto firm charters without deposit insurance

The American Bankers Association called on the Office of the Comptroller of the Currency to slow down on the approval of national bank charters for digital asset firms, citing unresolved risks in receivership protocols and a lack of finalized federal oversight.

In a comment letter on Wednesday, the ABA emphasized that, before approving further charters, the OCC needs to confirm that its supervisory and insolvency frameworks can address the risks posed by firms operating in cryptocurrency and stablecoin markets.

The association’s call for patience centers on the legislative timeline of the GENIUS Act. While the OCC has recently conditioned certain charter approvals on future compliance with the Act, the ABA noted that full implementation remains “likely years away” as it requires coordinated rulemaking across five separate agencies, including the Federal Reserve and the FDIC.

Certain recent and future OCC charter applicants, the ABA said, may need to register with the Securities and Exchange Commission as regulated brokers, investment advisers, or investment companies. Trust companies seeking to rely on the statutory bank exemption under federal securities laws must engage a substantial portion of their activities in exercising fiduciary powers, the association noted, warning that SEC oversight would “significantly weaken the traditional wall between banking and securities regulation.”

The ABA criticized the OCC’s recent practice of conditioning charter approvals on applicants agreeing to “conform, cease, or divest” their operations to comply with the GENIUS Act. The association urged the agency instead to “be patient” and delay approvals until each applicant’s regulatory obligations are fully defined.

“ABA strongly encourages OCC to be patient, not measure its application decisioning progress against traditional timelines, and allow each charter applicant’s regulatory responsibilities to come fully into view before moving a charter application forward,” the association stated in the letter.

The lobby suggested that moving forward without a finished framework ignores the lessons of the 2022 digital asset contagion, specifically referencing the collapses of FTX and Celsius as evidence of the volatility inherent in novel business models.

Requisite naming conventions

The association also called on the OCC to prohibit any charter applicant that limits its activities to fiduciary functions or trust operations from including the word “bank” in its name unless the entity is a subsidiary of a bank or bank holding company.

Such entities “would not be engaged in the business of banking” and should not carry “a title that misrepresents the nature of the institution or the services it offers,” the ABA said. The prohibition, the association added, could help prevent “a crisis of consumer confidence” in the event of a failure.

The OCC charter dispute coincides with a separate legislative fight over whether stablecoin issuers should be permitted to pay interest or yield to holders. This provision has divided banks and crypto companies negotiating the latest crypto market structure bill draft introduced on Jan. 9 by Senate Banking Committee Chair Tim Scott.

Bank of America CEO Brian Moynihan told analysts during a Jan. 15 earnings call that the U.S. Treasury Department studies project that up to $6 trillion in deposits could shift from banks to stablecoins if Congress does not restrict interest-bearing products.

Legislation to address stablecoin yields remains unresolved. The latest Senate Banking Committee draft would ban interest payments on idle stablecoin balances but allow activity-based rewards, such as staking or liquidity provision.

Meanwhile, several crypto companies, including Circle, Ripple, BitGo, Paxos, Coinbase, and Nomura’s Laser Digital, are pursuing or holding conditional OCC trust bank charters, racing to secure access to the U.S. banking system amid regulatory uncertainty.