U.S. bankers are pushing back hard. The American Bankers Association (ABA) and other big banking groups have asked regulators to delay crypto firms’ bids for national bank licenses. These letters landed on July 21, pointing to companies like Ripple (maker of XRP) and Circle (maker of USDC). The ABA says giving them a federal bank charter would raise “significant policy and process concerns”(cointelegraph Reported). Regulators are now reviewing Ripple’s application to charter a special trust bank for its new RLUSD stablecoin.
Why Banks Are Worried
Banks say crypto businesses are very different from normal banks. Traditional banks do many things like managing people’s estate or trust accounts. Crypto firms mostly just hold digital coins for customers. The ABA letter warned that crypto firms do not fit the old “fiduciary” rules for trust banks. In other words, merely keeping crypto safe isn’t the same as usual banking tasks.
Alt: A historic bank building on a street with people walking by. Caption: A traditional bank building, representing the banking industry concerned with Ripple’s federal charter.*
By giving crypto firms a charter, banks fear this could weaken the rules. They argue it might let new players skip some safety checks that normal banks follow. One crypto banker, Caitlin Long, noted this concern: if a trust charter really has lighter oversight, even regular banks might want to switch to that model to cut costs. Banks also worry that without a full public review, approving Ripple’s license could create “new systemic risks” in the financial system.
What’s at Stake
Ripple and Circle have applied for federal charters under new stablecoin laws. For example, Circle applied on June 30 for a charter to manage its USDC reserves. Ripple filed on July 2 for a charter to run its RLUSD stablecoin and even open a Fed account for its reserves. So far, only Anchorage Digital (a crypto bank) has such a national charter (it got one in 2021). Many other crypto firms (like BitGo, Fidelity, and Wise) are also seeking similar licenses.
Banks and crypto experts are now watching closely. If regulators approve Ripple’s charter, it will set a big precedent for other digital-asset companies. This debate shows a larger question: how do we make sure the rules keep both banks and crypto safe? Regulators say they will consider the public’s input before deciding. Until then, the ABA and its members want regulators to “pump the brakes” on crypto charters, saying more review and transparency is needed.
Conclusion: The tug-of-war over Ripple’s bank license highlights a clash between old finance and new crypto. The U.S. Office of the Comptroller of the Currency (OCC) must now weigh bank safety rules against crypto innovation. How this plays out will be important for the future of cryptocurrencies in the banking world.
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