Dispute Over Banking Licenses for the Crypto Industry

Major U.S. banks are considering filing a lawsuit against the government regulator responsible for overseeing the financial sector. The issue stems from a growing number of banking licenses being granted to companies operating in the cryptocurrency industry.

According to The Guardian, the Bank Policy Institute, an organization representing the largest financial institutions in the United States, is analyzing the possibility of taking legal action against the Office of the Comptroller of the Currency (OCC). Sources familiar with the matter say banks believe granting licenses to crypto companies could pose risks to customers as well as to the stability of the entire financial system.

At the center of the dispute is the interpretation of federal licensing rules. Representatives of the banking sector argue that the OCC ignored earlier warnings from the industry and has begun allowing cryptocurrency firms to operate under conditions similar to those applied to trust banks.

In December, the regulator granted conditional approval for the creation of national trust banks to several companies from the crypto sector. These included BitGo, Fidelity Digital Assets, Ripple, and Paxos. In the following months, similar approvals were also issued to Crypto.com, Bridge, and Stripe.

More companies are now seeking the same status. On February 27, blockchain infrastructure firm Zerohash submitted its application. In January, World Liberty Financial, a company linked to Donald Trump, also applied for a license. The firm hopes to expand the use of its stablecoin USD1 and is still awaiting a decision.

A national trust bank license allows a company to operate as a federally regulated financial institution. Among other things, it enables firms to provide custody services, store digital assets, and manage them on behalf of clients.

However, the Bank Policy Institute argues that such licenses may involve less regulatory oversight than that applied to fully licensed commercial banks. The organization has not yet made a final decision on whether it will proceed with a lawsuit against the OCC.