OCC's Approval Of Crypto Charters Faces Pushback From Banking Lobbyist Groups | Bitcoinist.com

Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure The Office of the Comptroller of the Currency (OCC) recently sparked a wave of criticism from traditional finance groups following its approval of conditional bank charters for five cryptocurrency firms: Ripple, Circle, BitGo, Paxos, and Fidelity

Stablecoins Seen As Direct Threat

Following the OCC’s announcement, industry stakeholders quickly voiced their concerns. Traditional banks expressed apprehension that these approvals stretch the definition and historical purpose of the national trust bank charter

Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America, stated that the conditional approvals endanger consumers and create institutions that the OCC may not effectively manage

She further remarked that the new framework allows stablecoin operators access to the federal banking system without the rigorous capital and regulatory requirements that traditional banks must uphold.

Related Reading: Japan’s Crypto Policy Shift Raises Questions for the Market Ahead of Key Macro DecisionsTodd Phillips, a professor at Georgia State University and former attorney with the Federal Deposit Insurance Corporation, also noted that stablecoins pose a direct threat to the conventional banking model

He remarked that banks are reacting aggressively to counter this emerging competition from stablecoins, which are perceived as encroaching on their market share.

In defense of the OCC’s actions, Comptroller of the Currency Jonathan Gould emphasized the benefits of new entrants in the federal banking sector, asserting that they would introduce fresh products and services while enhancing competition. He views this as a positive move for consumers and the broader banking industry.

Banks Raise Alarm Over OCC’s Crypto Trust Charters

One key difference between trust banks and conventional banks is their inability to accept deposits or make loans. Nonetheless, banks are wary that these newly chartered firms may venture beyond merely holding assets to back stablecoins

Rob Nichols, president and CEO of the American Bankers Association, expressed concern that this expansion of the trust charter blurs the lines defining banking activities and could lead to regulatory arbitrage.

The Bank Policy Institute (BPI) also raised questions about the OCC’s approval process, urging transparency to help the public understand the rationale behind these decisions. Greg Baer, the BPI’s president and CEO, emphasized the need for clarity around the applications.

The current conditional approvals for crypto trust banks present a more viable litigation landscape than earlier fintech charters, according to Andrew Grant, co-founder of Runway Group, a consultancy focused on financial technology

Related Reading: Pundit Reveals Why January Will Be A Month For Dogecoin, But Can DOGE Price Reach ATHs?Many banks are reportedly unhappy about the momentum of the OCC’s recent decisions, suggesting they may take steps to introduce regulatory friction against these new entrants.

Furthermore, the provisions of the GENIUS Act permit the establishment of national banks without deposit insurance, which complicates the ability of traditional banks to mount effective legal challenges against the approved cryptocurrency firms

Todd Baker, a senior fellow at the Richman Center for Business, Law and Public Policy at Columbia Business School, noted that while litigation may yield some restrictions on crypto-related activities, it is unlikely to impact stablecoin issuance, redemption, or custody.

The daily chart shows the total crypto market cap drop below the $3 trillion mark on Monday. Source: TOTAL on TradingView.comFeatured image from DALL-E, chart from TradingView.com

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