Banks US to court over banking licenses for crypto companies

Thousands of local banks in the United States are taking action against the growing role of crypto companies in the financial system. Banking organization Independent Community Bankers of America (ICBA) has sued banking regulator OCC for special licenses for crypto companies.

According to the banks, crypto companies thus gain access to parts of the US banking system, without having to comply with the same rules as traditional banks. The outcome of the lawsuit can therefore become important for the further integration of crypto and the US banking system.

The dispute revolves around a special national license for trust banks. This allows companies to offer certain financial services under federal supervision without being a normal commercial bank.

According to the ICBA, this creates an uneven playing field. With such a license, crypto companies gain the credibility of federal banking supervision, while they do not automatically have the same obligations as traditional banks.

Ordinary banks must, among other things, meet extensive capital and liquidity requirements. Many banks also offer deposit insurance through the Federal Deposit Insurance Corporation (FDIC), which protects customers' savings up to a certain limit.

A national trust bank works differently. For example, such an institution may not accept ordinary consumer deposits and cannot lend in the same way as a commercial bank.

According to ICBA chairman Rebeca Romero Rainey, this license was never intended as an alternative entrance for crypto companies to the US banking system.

The lawsuit comes at a time when the crypto sector is becoming increasingly intertwined with the traditional financial world. Under President Donald Trump and OCC Chairman Jonathan Gould, multiple applications from crypto companies for national trust bank licenses have been approved or conditionally approved.

The ICBA believes that the OCC goes too far in this regard. According to the banking organization, the regulator allows companies to carry out activities that fall outside the traditional role of a trust bank.

With the lawsuit, the ICBA therefore wants to determine where the OCC's powers end.

The outcome may have consequences for crypto companies that seek to join the US financial system via a national trust bank license.

If the court follows the ICBA, the scope for such permits may become smaller. This can make it more difficult for crypto companies to offer certain financial services under federal supervision.

If the OCC is correct, the regulator can continue to use this route to give crypto companies access to parts of the regulated financial system.

The case therefore revolves around an increasingly important question in the United States: What rules must crypto companies comply with when offering services that are increasingly closer to traditional banking?