Community banks sue US regulator over crypto firm charters
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FILE PHOTO: A representations of cryptocurrency Bitcoin and Binance is seen in this illustration taken August 6, 2021. REUTERS/Dado Ruvic/Illustration/File photo
By Pete Schroeder
WASHINGTON, Oct 2 (Reuters) - A trade organization representing community banks sued a US bank regulator Friday, claiming that its decision to grant limited bank charters to cryptocurrency firms exceeds its regulatory authority.
The Independent Community Bankers of America, which represents banks that typically have less than $10 billion in assets, filed the suit in the US District Court for the District of Columbia.
The group said the Office of the Comptroller of the Currency must revoke a recent rule and related guidance smoothing the way for crypto firms to apply for national trust bank charters. The group argued the move grants legitimacy to crypto firms without sufficient safeguards.
"American consumers reasonably expect a federally chartered bank to carry federal protections. Digital assets held at a crypto firm operating under a national trust charter do not carry those important safeguards. ICBA is asking the court to return the OCC to its statutory limits. Any non-fiduciary firm seeking the benefits of a federal bank charter should meet the same standards as community banks," said ICBA President and CEO Rebecca Romero Rainey in a statement.
An OCC spokesperson declined to comment.
Under President Donald Trump, the regulator has granted several such charters to firms primarily engaging in crypto activities and other fintechs. The national trust bank charters allow companies to manage and hold assets on behalf of customers and settle payments faster. The license does not, however, allow the companies to take cash deposits or make loans.
But ICBA argued in its lawsuit that granting such charters exceeds the regulator's authority and Congress' intent, while arguing traditional banks must adhere to stricter regulatory requirements and oversight under their charters.
(Reporting by Pete Schroeder; Editing by Cynthia Osterman)
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