Community Banks Sue OCC Over Crypto Trust Charters as Side Door Fight Reaches Federal Court

The Independent Community Bankers of America has sued the Office of the Comptroller of the Currency, arguing that the regulator’s decision to let cryptocurrency companies obtain limited national trust bank charters exceeds the authority Congress granted the agency and undermines the traditional banking system’s safeguards. The ICBA filed the lawsuit on Friday, October 3, in the U.S. District Court for the District of Columbia. The trade group, which represents thousands of community banks across the country, claims the OCC has handed crypto firms the credibility of a U.S. bank charter without requiring the safeguards and compliance obligations that apply to conventional banks. “The OCC’s decision to allow companies to obtain national trust bank charters to conduct substantial non-fiduciary activities exceeds the authority Congress granted the agency,” ICBA president and CEO Rebeca Romero Rainey said in a statement. “Congress did not create the national trust charter as a side door into the banking system for crypto firms seeking the credibility of a federal bank charter without the Community Reinvestment Act obligations, consolidated supervision, capital and liquidity standards, and FDIC insurance that apply to insured depository institutions.” Rainey added that the ICBA is asking the court to return the OCC to its statutory limits. The OCC had not replied to a request for comment by the time of publication. The lawsuit takes direct aim at a chartering pipeline that has accelerated under President Donald Trump and OCC head Jonathan Gould. Since the change in administration, the agency has approved or conditionally approved multiple applications from crypto companies seeking trust charters to expand their services in the United States. Recent milestones include conditional approvals for stablecoin startup Bastion’s national trust bank charter, Revolut’s U.S. bank charter with a stablecoin on its 2027 roadmap, and a Trump-linked World Liberty Financial charter for a planned 4 billion USD stablecoin bank. Coinbase also secured a landmark OCC trust charter tied to stablecoin reserve arrangements under the GENIUS Act framework. The trust charter’s appeal for crypto firms is straightforward: it confers federal recognition and the ability to offer custody-like and fiduciary services without the full weight of commercial banking regulation. But that is precisely the ICBA’s complaint. Trust bank charters do not allow the holders to accept deposits or make loans, distinguishing them from conventional commercial banks, yet in the ICBA’s view the crypto industry markets the charter as if it were equivalent to a full banking license. At the core of the dispute is the question of what Congress intended the national trust charter to cover. The ICBA argues the charter was designed for traditional fiduciary activities such as trust administration and asset management, and that crypto firms are using it to conduct substantial non-fiduciary business, effectively winning a federal banking badge while sidestepping four pillars of the regulatory perimeter: Community Reinvestment Act obligations, consolidated supervision, capital and liquidity standards, and FDIC insurance. The community banking lobby has watched the crypto charter wave with growing frustration. While community banks navigate rising compliance costs and deposit competition, crypto-native firms have secured federal charters in months, often with conditional approvals that let them begin limited operations before meeting every requirement. The optics of a regulator accused of favoring a new industry over incumbent institutions now move from op-eds into federal court. The legal theory is likely to draw on administrative law arguments that have reshaped financial regulation litigation in recent years. If the court accepts the ICBA’s claim that the OCC stretched a narrow fiduciary charter into a general-purpose crypto banking license, the ruling could invalidate or restrict charters already granted, throwing the business plans of several high-profile firms into uncertainty. If the court defers to the agency’s interpretation of its statutory authority, the trust charter pipeline becomes significantly harder to challenge. For the crypto industry, the timing is uncomfortable. The OCC’s friendlier posture has been a cornerstone of the regulatory thaw that followed the CLARITY Act debate and the GENIUS Act’s stablecoin framework, both of which pushed banks and crypto firms closer together. A lawsuit that questions the legal foundation of crypto banking charters reintroduces exactly the kind of jurisdictional uncertainty the industry believed it had moved past. Neither side has proposed a quick resolution. The OCC is expected to defend its authority vigorously, and the case is likely to take months to reach substantive arguments. In the meantime, every new trust charter application pending at the agency will proceed under a cloud, and every crypto firm already operating under a trust charter will be watching the docket in Washington closely. For community banks, the suit is about competitive fairness. For crypto firms, it is about whether the door the industry spent two years opening stays open. The answer now sits with a federal judge in D.C.

The cryptocurrency market remains highly volatile. This article is for informational purposes only and does not constitute financial advice.