Community Bankers Sue OCC Over Crypto Firms’ Bank Charter Path

The Unbiased Neighborhood Bankers of America (ICBA) sued the Workplace of the Comptroller of the Forex (OCC) on October 2, difficult the company’s authority to constitution non-depository, non-fiduciary nationwide belief banks that conduct substantial cryptocurrency actions.

The lawsuit, filed within the U.S. District Court docket for the District of Columbia, targets the OCC’s March 2026 last rule governing nationwide belief financial institution charters, Interpretive Letter No. 1176, and the company’s conditional approval of Protego Holdings Corp.’s nationwide belief financial institution constitution.

ICBA argues that the OCC exceeded the authority granted underneath the Nationwide Financial institution Act by permitting corporations that don’t take deposits and usually are not primarily engaged in fiduciary actions to function underneath a nationwide trust-bank constitution. The banking group is asking the court docket to declare the challenged actions illegal and vacate them.

ICBA challenges OCC’s expanded trust-bank framework

On the heart of the case is the scope of the nationwide trust-bank constitution.

The OCC issued Interpretive Letter No. 1176 in 2021, concluding {that a} nationwide belief financial institution is just not restricted to fiduciary actions and might conduct sure non-fiduciary actions when individually licensed underneath federal banking legislation.

ICBA has repeatedly challenged that interpretation. In its lawsuit, the group argues that the Nationwide Financial institution Act doesn’t authorize the OCC to create a nationwide banking pathway for corporations that neither settle for deposits nor primarily carry out fiduciary features.

The group additionally argues that the OCC ought to have used formal notice-and-comment rulemaking earlier than increasing the permissible actions of nationwide belief banks. ICBA beforehand raised the identical objection in feedback on crypto and fintech constitution functions.

The OCC’s 2026 rulemaking adopted a January proposal that might permit limited-purpose belief banks to have interaction considerably in non-fiduciary actions. ICBA opposed that strategy and urged the company to withdraw or revise the proposal.

Crypto corporations have turn out to be main constitution candidates

The lawsuit comes after a sequence of nationwide trust-bank approvals and functions from crypto and fintech corporations.

In February, the OCC authorized nationwide trust-bank charters for Stripe’s Bridge Nationwide Belief Financial institution, Protego’s Nationwide Digital Belief Firm, and Foris DAX Nationwide Belief Financial institution, the proposed U.S. banking subsidiary of Crypto.com, based on ICBA.

Different crypto and funds corporations have additionally pursued the constitution. ICBA has individually opposed functions involving corporations together with Payward, the guardian of Kraken, in addition to different digital-asset and fintech corporations.

ICBA argues that these establishments can receive a federal constitution with out being topic to the total set of necessities that apply to federally insured industrial banks. Nationwide belief banks that don’t settle for deposits usually don’t have FDIC-insured deposits. In addition they function underneath a distinct regulatory construction from full-service insured banks, together with variations in capital, liquidity, and different prudential necessities.

Warren and huge banks additionally query OCC charters

The ICBA’s lawsuit follows separate criticism from lawmakers and bigger banking teams over the OCC’s strategy to nationwide trust-bank charters. In Could, Senator Elizabeth Warren questioned the agency’s approval of crypto-focused trust charters, arguing that some corporations gave the impression to be conducting actions past these permitted underneath the Nationwide Financial institution Act, based on a Bloomberg report.

Warren cited at the very least 9 nationwide belief charters for crypto corporations and questioned whether or not the corporations had been eligible for the construction. Her objections heart on the identical broader challenge raised by ICBA: whether or not the OCC can use the nationwide trust-bank framework for corporations whose companies lengthen past conventional fiduciary actions.

Giant U.S. banks have additionally thought-about authorized motion. The Financial institution Coverage Institute, which represents main lenders, was reviewing a doable problem to the OCC’s chartering strategy, based on a March report by The Guardian. The group had not determined on the time whether or not to file a lawsuit.

Banking teams have separately opposed several crypto and fintech charter applications, together with these involving Circle, Ripple and funds firm Smart. Their objections have targeted on variations between the regulatory necessities for nationwide belief banks and people relevant to conventional insured banks.

Protego constitution can also be in court docket problem

ICBA is individually asking the court docket to vacate Protego’s conditionally authorized nationwide trust-bank constitution. The OCC conditionally approved the constitution for Protego Holdings in February 2026. The corporate’s proposed actions embody digital-asset custody and different cryptocurrency-related companies.

ICBA had beforehand opposed the applying, arguing that the proposed enterprise mannequin included substantial non-fiduciary actions outdoors the standard scope of a nationwide belief constitution. The group additionally raised considerations about Protego’s governance, risk-management construction, and monetary situation in its objections to the applying. These are ICBA’s allegations and objections, reasonably than findings by the court docket.

ICBA’s broader argument is that the constitution framework might create totally different regulatory necessities for establishments competing in comparable monetary markets. Conventional group banks that settle for insured deposits function underneath necessities involving capital, liquidity, client safety, the Neighborhood Reinvestment Act, and FDIC supervision.

The lawsuit argues {that a} non-depository nationwide belief financial institution can present sure custody, buying and selling, lending, or different monetary companies with out being topic to the identical framework. ICBA says that distinction might create aggressive stress on group banks and permit crypto corporations to broaden into banking-related actions underneath a much less in depth regulatory regime.

The group has made comparable arguments in its objections to a number of nationwide trust-bank functions. In December 2025, for instance, ICBA criticized the OCC’s conditional approvals of 5 nonbank fintech constitution functions, saying the candidates had been in search of entry to the banking system with out the total regulatory necessities relevant to conventional banks.

Lawsuit raises client and supervisory questions

ICBA additionally argues that the totally different regulatory therapy might have implications for shoppers holding digital belongings with nationwide belief banks.

The group says crypto-focused establishments can face dangers related to digital-asset markets, together with market volatility, cybersecurity, fraud, and cash laundering. It argues that the absence of FDIC insurance coverage and a few conventional financial institution necessities might depart prospects with totally different protections from these obtainable at insured banks. The lawsuit additionally questions the regulatory framework for resolving an uninsured nationwide financial institution if it fails.

These arguments type a part of ICBA’s case that the OCC shouldn’t broaden the nationwide trust-bank constitution with out clearer congressional authorization and a broader regulatory framework.

ICBA seeks to vacate OCC rule and constitution approval

The lawsuit was introduced underneath the Administrative Process Act. ICBA asks the court docket to search out the OCC’s last rule and Interpretive Letter No. 1176 illegal and set them apart.

The group can also be difficult Protego’s conditional constitution approval and is asking the court docket to vacate that approval. ICBA’s central authorized argument is that the OCC can’t use its present authority underneath the Nationwide Financial institution Act to determine a nationwide trust-bank pathway for corporations which are neither deposit-taking banks nor primarily fiduciary establishments.

The OCC’s interpretation of that authority will now be examined in federal court docket as crypto and fintech corporations proceed in search of nationwide trust-bank charters.

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