ICBA Urges OCC: Block Ripple’s Bank Bid Amid Stablecoin and Compliance Red Flags

Ripple’s ambitions to dive deeper into traditional finance just hit a wall—banking lobbyists are armed with pitchforks.

Stablecoin Skepticism Meets Regulatory Resistance

The Independent Community Bankers of America (ICBA) dropped a bombshell letter urging the Office of the Comptroller of the Currency (OCC) to reject Ripple’s application for a bank charter. Their gripe? Alleged gaps in compliance frameworks and unresolved concerns over Ripple’s stablecoin playbook. Because nothing terrifies legacy banks like a crypto-native company with a balance sheet.

DeFi’s Trojan Horse or Just Bureaucratic Sabotage?

While Ripple’s execs tout their ‘regulatory-first’ approach, critics argue the move reeks of desperation—a bid to legitimize XRP’s gray-area status. The OCC now faces a classic fintech dilemma: innovate or placate the old guard. Meanwhile, crypto traders shrug and buy the dip. Some things never change.

Closing thought: If banks spent half as much energy modernizing as they do lobbying, we’d all be getting 5% APY on our checking accounts by now.

The Independent Community Bankers of America (ICBA) has issued a letter to the Office of the Comptroller of the Currency (OCC), formally opposing Ripple’s application for a national bank charter. ICBA pointed out several systemic risks related to Ripple’s proposed stablecoin RLUSD, including its non-compliance with law and ordinance.

Why is the ICBA Opposing Ripple’s National Bank Application?

On Monday, ICBA, a primary trade group for small US banks, wrote a letter to OCC arguing that RLUSD effectively mimics the function of traditional bank deposits. They warn that this could drain funds from community banks and destabilize the traditional banking system. 

ICBA stated, “The OCC should not allow stablecoin issuers to use the national trust bank charter to benefit from full-service bank-powers without full-service bank-requirements.”

“Stablecoins like RLUSD, which function similarly to deposits by enabling transfers, purchases, and dollar redemption, differ sharply from the custodial and fiduciary roles trust banks were designed for. This demands stricter oversight and stronger consumer protections than those traditionally applied to trust banks,” it added. 

Ripple’s History of Non-Compliance Becomes an Issue 

The ICBA letter also cites Ripple’s prior legal and regulatory inadequacies in compliance with federal law. It mentioned the recent controversies and legal actions involving Ripple Labs and its subsidiary, XRP II, for failing to implement BSA/AML/CFT compliance. 

Moreover, it also raised the issue of the SEC’s lawsuit against Ripple, citing that “Ripple also has difficulty complying with securities laws and regulations.”  

Ripple Lab’s history of deliberately and recklessly violating securities laws, along with the ongoing nature of this misconduct, compelled the ICBA to oppose Ripple’s application. The bank association said that no company that pushes the boundaries of securities law, like Ripple Labs, should be permitted to use the national trust bank charter. 

ICBA Demands Stricter Oversight 

ICBA also criticized OCC for altering eligibility criteria for national trust bank charters, which eliminated the long-standing requirement and lacks statutory backing. Given these factors, the bank association urged the OCC to apply much stronger consumer and risk oversight standards to crypto-focused trust bank applicants like Ripple. 

Additionally, it also called on the OCC to implement enhanced regulatory scrutiny and robust enforcement to deter abuses that undermine public trust in the banking system.