US banks say crypto applications for trust charters threaten financial system

Big banks in the ￰0￱ not staying quiet anymore. They’re calling out crypto firms for trying to sneak into the regulated financial world using national trust-bank charters, and they’re ￰1￱ trade group giants, the Bank Policy Institute (BPI) and Independent Community Bankers of America, just told the Office of the Comptroller of the Currency (OCC) to kill Coinbase’s bid for one of these ￰2￱ it’s not just about ￰3￱ BPI already shot off letters on October 31 opposing similar moves from Ripple, Circle, Paxos, and a few ￰4￱ isn’t some turf war over licenses. It’s about ￰5￱ charters would let crypto platforms gain federal legitimacy without actually following the same strict rules traditional banks ￰6￱ banks are freaking ￰7￱ believe crypto platforms are looking for a shortcut into the heart of ￰8￱ choosing narrow trust charters, these platforms are trying to dodge full banking supervision, all while reaping the benefits of a bank ￰9￱ accuse crypto of trying to game the system Old-school lenders say this is a backdoor ￰10￱ claim crypto firms want to wear the bank badge without carrying the regulatory ￰11￱ fear it’ll destroy the whole point of having charters if anybody with a wallet app can get one and start acting like a ￰12￱ deeper concern is that crypto is rewriting the rules without ￰13￱ of the Currency Jonathan Gould didn’t seem ￰14￱ fired back Tuesday at the Clearing House annual conference in New York, saying the trust charters actually allow the OCC to put crypto firms under federal ￰15￱ to him, it’s better to have these companies inside the system than outside it.

“I have no ability to supervise or regulate nonbanks,” Gould said. “And so the only way I can possibly ensure a level playing field is for those who voluntarily come into this system or want to come into the system.” The banks aren’t buying ￰16￱ argue that even if the charters bring crypto firms closer to regulators, the playing field is still ￰17￱ when companies like Coinbase advertise a 3.85% return on USDC holdings, a stablecoin issued by ￰18￱ the Genius Act, which just passed as the first federal law setting rules for stablecoins, issuers can’t offer ￰19￱ platforms tied to them apparently still ￰20￱ defends its position and slams back To critics, that 3.85% looks a lot like ￰21￱ if it walks like a deposit and talks like a deposit, it could pull money out of the traditional banking system.

That’s what’s got the banks sweating, a slow bleed of customer funds into stablecoin-based returns, with none of the protections or rules they’re stuck ￰22￱ far, the OCC hasn’t approved any new trust charters this ￰23￱ pressure is ￰24￱ the Genius Act now law, and incentives from crypto platforms already live, both sides know the next decision could reset how finance works in this ￰25￱ say the regulatory gap is being ￰26￱ charters could let crypto companies handle custody and payments while skipping over the tighter controls real banks ￰27￱ crypto leaders aren’t backing ￰28￱ say trust companies already follow laws, including a ban on lending, which lowers the ￰29￱ Association CEO Summer Mersinger blasted the banks.

“It’s disappointing that the Bank Policy Institute predictably continues to resist competition and innovation in financial services,” she said. “Rather than defending the status quo, it’s time to drain the regulatory moat that protects traditional finance from new entrants.” Then there’s the Trump ￰30￱ Donald Trump returned to the White House, his administration has peeled back rules and given the crypto space more room to ￰31￱ last month, the Federal Reserve hosted a payments innovation conference, sending a loud message that the crypto crowd is no longer on the ￰32￱ Governor Christopher Waller made it clear: “This is a new era for the Federal Reserve in payments, the defi industry is not viewed with suspicion or scorn.

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