Banks Seek Delay of Crypto Bank Licenses Over Trust Charter

Major US banking groups led by the American Bankers Association have formally petitioned the Office of the Comptroller of the Currency (OCC) to delay approval of crypto bank licenses. In a July 17 letter, they argued applications from Circle, Ripple and Fidelity Digital Assets lack transparency and risk regulatory inconsistencies and unfair competition. The banks warn that granting crypto bank licenses without public review could unsettle trust charter policies, expand charter powers beyond traditional fiduciary duties, and pose systemic risks. Crypto advocates, including Custodia Bank founder Caitlin Long and Paradigm’s Alexander Grieve, counter that traditional banks oppose competition and favor lower capital requirements for crypto trust charters. Long warned the dispute may trigger litigation and prompt banks to pursue similar charters to cut costs and ease regulation. If approved, crypto bank licenses would let issuers bypass state restrictions, directly manage stablecoin reserves, and offer nationwide digital asset custody under federal oversight. For traders, the delay in crypto bank licenses signals ongoing regulatory hurdles for digital asset custody services. Prolonged uncertainty may weigh on stablecoin issuers and custody providers, affecting market liquidity and institutional adoption. However, a final decision by the OCC will shape the balance between financial innovation and risk management in the US crypto market.