Bankers Call for Caution on Crypto Trust Bank Charters
The American Bankers Association (ABA) has urged the Office of the Comptroller of the Currency (OCC) to delay approving new national trust bank charters for crypto and stablecoin companies.
In a recent comment letter, the ABA warned that the regulatory framework under the GENIUS Act is still evolving. Approving new crypto-focused trust banks before final rules are in place could create long-term risks for the financial system and consumers.
According to the banking group, rushing approvals could lead to gaps in oversight, weak safeguards, and regulatory loopholes.
Why the GENIUS Act Matters
The GENIUS Act is designed to establish clear rules for US dollar stablecoins, covering areas such as:
- Reserve requirements
- Consumer protection
- Compliance standards
- Oversight responsibilities
However, many of these rules are still being drafted. The ABA argues that approving trust charters before these standards are finalized could result in inconsistent enforcement and unclear legal obligations.
Without full clarity, crypto trust banks may operate in regulatory gray zones.
Key Risks Highlighted by Bankers
The ABA identified several major concerns related to crypto trust banks:
1. Safety and Soundness Issues
Uninsured digital asset institutions may lack the capital and safeguards expected of traditional banks, increasing systemic risk.
2. Customer Asset Protection
Banks raised concerns about whether crypto trusts can properly segregate and protect customer funds during market stress or insolvency.
3. Cybersecurity Threats
Crypto platforms remain prime targets for hacking and fraud, requiring higher operational standards.
4. Regulatory Arbitrage
Some firms could use trust charters to avoid oversight from the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
This could weaken investor protection and market integrity.
Recent Crypto Trust Bank Approvals
Despite ongoing regulatory uncertainty, the OCC granted conditional trust charters in December 2025 to several major crypto firms, including:
- BitGo Bank & Trust
- Fidelity Digital Assets
- Ripple National Trust Bank
- Paxos Trust Company
These entities can custody digital assets under federal supervision but cannot accept deposits or issue loans.
The ABA believes more approvals should wait until regulatory responsibilities are fully defined.
Naming Rules and Consumer Confusion
Another issue raised by bankers involves naming practices.
Some limited-purpose trust institutions use the word “bank” despite not offering traditional banking services. The ABA argues this could mislead customers into believing these firms have full federal protections, which they do not.
Stricter naming rules, they say, would improve transparency and trust.
Impact on the Crypto Industry
If the OCC follows the ABA’s recommendation, crypto companies may face:
- Slower expansion in the US
- Longer licensing processes
- Higher compliance costs
- Increased regulatory scrutiny
While this could delay innovation, supporters argue it will strengthen market credibility and protect investors in the long run.
Clearer rules may also encourage institutional investors to participate more confidently.
What This Means for Crypto Users
For everyday crypto users, stronger regulation can mean:
- Better protection of funds
- Lower risk of platform failures
- More transparent business practices
- Greater confidence in regulated providers
However, it may also slow down new product launches and services.
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Conclusion
The ABA’s call to slow crypto trust bank approvals highlights a growing push for regulatory clarity before expansion.
With GENIUS Act rules still under development, US banks want regulators to prioritize stability and consumer protection over speed. How the OCC responds could shape the future of crypto banking in America.
For users and businesses alike, the next phase of regulation may determine how securely and efficiently digital assets integrate into the traditional financial system.