US banking giants are considering legal action against their federal regulator as a new wave of crypto and fintech licenses sparks alarm. The Bank Policy Institute (BPI), representing 40 top lenders including JP Morgan, Goldman Sachs, and Citigroup, is evaluating whether the Office of the Comptroller of the Currency’s (OCC) reinterpretation of federal licensing rules threatens financial stability.
As per a Guardian report, the OCC, led by Donald Trump appointee Jonathan Gould, has made it easier for crypto and fintech startups to obtain national trust bank charters, allowing operations across all 50 states. Banks argue these approvals bypass strict oversight, potentially putting consumers and the financial system at risk.
Besides easing entry for new firms, the OCC’s reforms reflect the Trump administration’s ideological push to mainstream crypto and fringe financial players. Trump’s family-run crypto firm, World Liberty Financial, applied for a national trust charter in January, intensifying congressional scrutiny.
Meanwhile, banks warn that these charters blur the line between regulated banks and lightly supervised fintechs. The BPI previously urged the OCC to reject applications from Circle, Ripple, and London-based payments company Wise.
The lobby group warned that “allowing firms to choose a lighter regulatory touch while offering bank-like products could blur the statutory boundary of what it means to be a ‘bank,’ heighten systemic risk and undermine the credibility of the national banking charter itself.”
Industry Concerns and Legal Options
Additionally, the BPI board, comprising JP Morgan’s Jamie Dimon, Bank of America’s Brian Moynihan, and Goldman Sachs’ David Solomon, is considering legal action against the OCC. The group sued the Federal Reserve in late 2024 over changes to stress tests, which eventually led to a revision of the rules. As such, a repeat of this scenario might occur as the BPI considers suing over approvals of crypto charters.
Besides, state regulators as well as smaller banking groups are also sounding this same alarm. The Conference of State Bank Supervisors, along with the Independent Community Bankers of America, emphasize the point that licensing crypto companies without any central federal oversight might compromise financial stability, consumer protection, and competition.
ICBA, a smaller banking group, warned of a potential loophole in a fundamental bank regulation principle, citing the OCC plans as creating “critical public policy concerns regarding consumers as well as the financial services sector as a whole.”
The ongoing debate is reflective of the rising level of tension between traditional banks and the regulators, who are keen to adopt the fintech revolution. However, the banks are adamant that it is imperative to sustain the stringent level of oversight.
