Community banks sue US regulator over crypto firm charters

A trade organization representing community banks sued a US bank regulator Friday, ​claiming that its decision to grant limited bank charters ‌to cryptocurrency firms exceeds its regulatory authority.

The Independent Community Bankers of America, which represents banks that typically have less than $10 billion in assets, filed the suit in the US District ​Court for the District of Columbia.

The group said the Office ​of the Comptroller of the Currency must revoke a recent ⁠rule and related guidance smoothing the way for crypto firms ​to apply for national trust bank charters. The group argued the move grants legitimacy ​to crypto firms without sufficient safeguards.

“American consumers reasonably expect a federally chartered bank to carry federal protections. Digital assets held at a crypto firm operating under ​a national trust charter do not carry those important safeguards. ICBA ​is asking the court to return the OCC to its statutory limits. Any non-fiduciary ‌firm ⁠seeking the benefits of a federal bank charter should meet the same standards as community banks,” said ICBA President and CEO Rebecca Romero Rainey in a statement.

An OCC spokesperson declined to comment.

Under President Donald ​Trump, the regulator ​has granted several ⁠such charters to firms primarily engaging in crypto activities and other fintechs. The national trust bank charters ​allow companies to manage and hold assets on ​behalf of ⁠customers and settle payments faster. The license does not, however, allow the companies to take cash deposits or make loans.

But ICBA argued in its ⁠lawsuit ​that granting such charters exceeds the regulator’s ​authority and Congress’ intent, while arguing traditional banks must adhere to stricter regulatory requirements ​and oversight under their charters.

Source : VOXeu