US banking lobby challenges cryptocurrency firms' bids for banking licenses

Banks jointly pressure to postpone approval of crypto company licenses

The American Bankers Association and several credit union groups recently jointly wrote to the Office of the Comptroller of the Currency (OCC) to postpone the decision on the application of national bank charters for cryptocurrency companies such as Circle Internet Group and Ripple Labs. They emphasized that the business models of these companies are fundamentally different from the fiduciary activities historically performed by traditional trust banks, and if approved, they will "fundamentally deviate" from the existing policy system. The banking industry pointed out that the application details disclosed at this stage are insufficient, and the public cannot effectively evaluate the business models and potential risks of these companies.

Why Crypto Companies Are Eager to Get Banking Licenses

Digital asset giants such as Ripple, Circle, and Fidelity Digital Assets have recently set off a "bank license application boom" because the OCC National Trust Bank Charter allows them to skip the complex interstate license barriers, achieve national business compliance and faster payment settlement. Stablecoin issuers are particularly benefited because the license will allow them to be regulated at the federal level, enhance market trust and expand traditional financial cooperation channels. For this reason, the crypto industry sees it as a key step into the mainstream financial system.

Traditional banks’ anxiety and “interesting reactions”

Caitlin Long, founder of Custodia Bank, commented on the X platform that the Banking Association's fight is "very interesting". If traditional banks are worried that trust charters will become de facto bank licenses, why don't they just transform into trust companies and enjoy lower capital requirements and looser supervision? Alexander Grieve, an executive at venture capital firm Paradigm, said bluntly: "Banks and credit unions rarely agree on anything, but they clearly agree that cryptocurrencies are becoming a real competitive threat."

New regulations and expectations of more applications

Logan Payne, a cryptocurrency lawyer at Winston & Strawn, pointed out that the newly passed GENIUS Act stimulates stablecoin issuers to seek banking licenses because they do not want to be limited to the scope of the license to issue only stablecoins, and still hope to expand more business scenarios. Even with the new license, issuers still need a state-level money transmission license to operate nationwide, which makes applying for a national trust bank charter from the OCC the best solution. It is expected that more crypto companies will follow suit in the future, and the regulatory level will inevitably face greater pressure.

Investor sentiment and market outlook

For investors, this is not only a regulatory game, but also a precursor to the reshaping of the financial landscape. Once digital asset giants such as Circle and Ripple successfully obtain licenses, they will have the ability to "be their own bank" and change the rules of the game for encrypted payments, stablecoins and even cross-border settlements. However, if the banking industry successfully delays or even prevents approval, the pace of integration between digital assets and traditional finance may be slowed down. The current market sentiment is complex: both expecting the opening of compliance channels to bring long-term benefits and worrying about short-term uncertainties caused by regulatory games.