OCC trust bank approvals for crypto firms stir industry unease

The OCC’s recent conditional approvals for five crypto-focused national trust banks are seen by crypto firms as a breakthrough into the federal banking system, but they have triggered strong pushback from traditional banks, community groups, and state regulators worried about “deregulation by charter.” Critics argue these entities will be able to offer bank‑like services around stablecoins and digital asset custody without the full prudential regime, deposit insurance, or community obligations that apply to conventional insured banks.​

What the OCC approved

• The OCC has conditionally approved national trust bank charters for five digital‑asset firms tied to stablecoins and crypto custody: Circle, Ripple, BitGo, Fidelity Digital Assets, and Paxos (via conversion from state trust status).​

• These entities are authorized to operate as national trust banks focused on fiduciary and custodial activities (e.g., crypto custody, stablecoin reserve management), but must still satisfy pre‑opening supervisory conditions and do not automatically gain access to Federal Reserve payment services.​

Why banks and advocates are uneasy

• Trade groups such as the American Bankers Association, the Bank Policy Institute, and the Independent Community Bankers of America say the OCC is stretching the historic “trust bank” concept to cover high‑volume payments and stablecoin activities that look like commercial banking without equivalent capital, liquidity, and resolution regimes.​

• Community and consumer advocates, including the National Community Reinvestment Coalition, warn that these charters create “banks in name only” that are not FDIC‑insured, do not have Community Reinvestment Act duties, and could confuse consumers who treat stablecoin or custodial products like insured deposits.​

Systemic risk and regulatory arbitrage concerns

• Opponents fear “charter arbitrage,” where crypto and fintech firms pick the trust‑bank pathway to access national preemption and payments‑adjacent status while avoiding the full supervisory framework applicable to insured depository institutions.​

• Regulators at the state level, including the Conference of State Bank Supervisors, argue that if these trusts expand beyond narrow fiduciary custody into broader payment or lending services, they may undermine state banking and money‑transmission regimes and complicate resolution in a failure scenario.​

How the OCC defends the move

• Comptroller Jonathan Gould and OCC officials say the trust charters are tightly conditioned, limited to fiduciary digital‑asset activities, and bring crypto-native firms into a supervised federal framework rather than leaving them entirely in the unregulated or state‑only perimeter.​

• The OCC positions this as “modernization”: giving national banks and trust banks a path to handle crypto custody and “riskless principal” blockchain transactions under existing safety‑and‑soundness standards, interpretive letters, and tailored conditions rather than creating a new charter type.​

What it means for crypto firms and markets

• For crypto issuers and custodians, the conditional trust charters promise regulatory status that can make it easier to serve institutional clients, run stablecoin reserves, and connect to banks and payment systems—albeit with significant compliance expectations.​

• For the wider market, the move signals that federal banking policy under the current administration is shifting from shutting crypto out of the banking system to cautiously integrating it, even as debates over consumer protection, competitive equity, and systemic risk remain unresolved.​