TLDR
- Major U.S. banking associations are opposing national trust charters for Ripple and Circle.
- The associations argue that Ripple and Circle do not meet fiduciary requirements expected of national trust banks.
- They claim the public has not received enough information to properly evaluate the charter applications.
- The groups are asking the OCC to delay any decisions until full business details are disclosed.
- They believe granting these charters without proper scrutiny could harm the stability of the financial system.
Several U.S. banking associations are urging the Office of the Comptroller of the Currency to halt charter reviews. These groups represent a wide spectrum of the traditional banking industry across the country. They have expressed strong opposition to granting national trust charters to digital asset firms like Ripple and Circle.
Ripple Draws Scrutiny Over Fiduciary Role Concerns
Ripple has faced significant pushback over its application for a national banking charter due to its business model. Traditional banking groups argue that Ripple does not conduct fiduciary activities typically required for a national trust bank. Instead, they claim Ripple primarily focuses on digital asset custody, which falls outside the OCC’s fiduciary criteria.
This concern centers on the OCC’s existing guidelines that separate custody from fiduciary operations under banking law. Ripple’s focus on holding digital assets does not meet the standard trust bank responsibilities, such as estate or asset management. The banking associations assert this represents a fundamental mismatch with regulatory intent.
Additionally, the associations emphasize the need to uphold the integrity of trust bank standards. They say that allowing Ripple to proceed without fulfilling fiduciary duties would alter core charter qualifications. They believe this decision could undermine the role of trust banks across the financial sector.
Circle Faces Licensing Hurdles Amid Transparency Issues
Circle has also drawn objections over its application for a national trust charter due to concerns about transparency. Associations like the American Bankers Association and ICBA highlight that Circle’s public application lacks essential business details. They argue that the lack of disclosure makes meaningful public comment nearly impossible.
These groups say that stakeholders must understand Circle’s business operations to evaluate its suitability for a national charter. Without full access to operational models, they argue the public cannot assess compliance with fiduciary expectations. The lack of clear financial plans further complicates trust bank alignment.
They are calling on the OCC to extend the public comment period to review Circle’s proposal in detail. The associations want expanded disclosures from Circle to assess its potential role under federal banking rules. They say that failing to provide more clarity would weaken the entire public review process.
Banking Groups Warn Against Precedent-Setting Licensing
The associations argue that approving Ripple and Circle’s charters could shift U.S. banking policy without proper evaluation. They say trust banks must primarily conduct fiduciary services and not simply act as digital asset custodians. Approving firms like Ripple could lead to broader regulatory challenges in the future.
They warn that new entrants may bypass traditional regulatory scrutiny by using similar charter pathways. This could allow companies that do not align with trust banking requirements to operate nationally. They believe this undermines competition and weakens the oversight framework built over decades.
Ripple and Circle may gain advantages over traditional banks without being subject to identical rules. The associations fear such benefits could create regulatory inconsistencies and systemic vulnerabilities. Therefore, they insist that all applicants meet existing standards before receiving national trust status.
Associations Demand Regulatory Delay and Public Input
The banking coalitions are pressing the OCC to delay any final decision on Ripple and Circle’s charter applications. They say more information must be published to ensure transparency and proper public review. Without clear disclosures, the regulatory process becomes unbalanced and incomplete.
These associations believe a rushed decision would bypass essential stakeholder input. They are requesting full business plans be made available before any regulatory move. The groups insist that national charters should only be issued after broad, informed discussion.
They conclude that changing trust charter standards without consultation sets a dangerous precedent. Any major policy shift should undergo public examination before implementation. The OCC must maintain clear rules to protect the stability and fairness of the banking system.
