Several organizations representing banks and credit unions have formally requested that US regulators postpone issuing federal banking licenses to cryptocurrency businesses.
In a correspondence dated July 17, the American Bankers Association, alongside other industry groups, appealed to the Office of the Comptroller of the Currency (OCC) to hold off on making any decisions until more comprehensive details regarding the applicant’s operational strategies are publicly accessible.
The groups assert that the applications submitted by entities like Circle, Ripple, and Fidelity Digital Assets present significant legal and regulatory challenges.
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If granted, these licenses would authorize these crypto firms to function as nationally chartered banks, facilitating faster payment processing and eliminating the requirement to secure individual approvals from each state.
However, the groups contend that the information contained within the applications is insufficient for adequate evaluation or public consultation. They also emphasize that the OCC’s decision-making process should be subject to greater scrutiny should it proceed with approvals.
The letter argues that safeguarding digital assets doesn’t inherently qualify as a fiduciary activity, and granting charters when such services are not the primary focus would represent a shift in OCC policy.
Custodia Bank founder, Caitlin Long, remarked in a statement on X, posted on July 19, that the debate surrounding the use of trust charters as a less regulated pathway to bank licenses is likely to escalate into legal challenges.
She further suggested that if cryptocurrency companies are successful in obtaining these licenses, traditional banks may explore switching to trust charters to decrease their operational expenses and lessen their regulatory obligations.
Earlier, on July 14, three US regulatory bodies jointly issued guidance cautioning banks about the potential risks associated with holding cryptocurrencies on behalf of their clientele. Find out what they had to say. Read the details here.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
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