According to reports, the traditional banking sector in the United States is increasing its opposition to crypto companies and considering a possible case against the Office of the Comptroller of the Currency (OCC) over the federal licenses granted to these companies.
According to Monday report By The Guardian, the Banking Policy Institute (BPI) is evaluating its legal options after the OCC did not respond positively to repeated warnings from influential banking groups and state regulators to reinterpret federal licensing rules.
Banks Seek Action Against OCC Crypto Licenses
After President Donald Trump took office, the OCC streamlined the process for crypto companies and fintech startups to obtain and operate under a national bank trust charter, allowing them to serve in all 50 states.
This led to the emergence of conditional bank charters was approved for five major crypto companies, including Ripple, Circle (CRCL), BitGo, Paxos, and Fidelity, last December.
However, traditional banks are concerned that the approval would effectively free these companies into the wider financial system without the oversight and scrutiny that full-fledged banks undergo.
In October, the Bank Policy Institute publicly called for the regulator to review license applications from popular cryptos and blockchain companiesincluding Circle, Ripple and London-based payments company Wise.
The BPI, which counts banking leaders such as JP Morgan’s Jamie Dimon, Bank of America’s Brian Moynihan and Goldman Sachs’ David Solomon among its board members, has warned that giving companies that offer bank-like services a light regulatory framework could blur the lines that define a “bank”.
According to them, this could increase systemic risk and undermine the integrity of the national banking charter. Currently, BPI is considering initiating legal action against the OCC.
Smaller banks and state regulators are also pushing back
The Guardian also reported that the OCC’s approach to crypto has also faced resistance from smaller banking groups and state regulators.
The Conference of State Bank Supervisors, which represents regulators from all 50 states, sent a letter to the OCC last month saying that approving regulation of crypto and payment companies would jeopardize competition, consumer protection and financial stability.
Similar concerns were voiced by the Independent Community Bankers of America (ICBA), an organization representing about 5,000 smaller banks.
The ICBA has warned that current proposals to license crypto companies create “gaps” in key banking regulations and raise serious public policy concerns about consumer safety and the overall stability of the financial services sector.
Featured image from OpenArt, chart from TradingView.com
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