U.S. Banks Panic: Lobbying OCC to Shut Down Crypto Banking Licenses in 2025 Power Grab

Wall Street's old guard draws battle lines against crypto's banking revolution.

Five major U.S. banks—names suspiciously absent from last year's DeFi adoption surge—are pressuring regulators to block digital asset banking charters. Their argument? 'Consumer protection.' (Translation: protecting 19th-century revenue models.)

The OCC now faces its biggest test since the 2023 stablecoin wars. Will it bow to traditional finance's lobbying blitz, or finally acknowledge that blockchain-native banks are inevitable?

One thing's certain: the banks wouldn't be fighting this hard if crypto wasn't winning.

Banking groups challenge legal basis for crypto trust charters

The Core of their complaint centers on the legal framework for trust banks. The groups stressed that national trust banks have always been limited to fiduciary services, things like managing estates or acting as trustees, under 12 U.S.C. § 92a.

What Circle, Ripple, and the others want, they say, is access to federal banking benefits without being actual fiduciaries. The letter says that using § 27(a) to charter crypto firms that don’t do fiduciary work “would be a loophole” and would let these companies dodge the Bank Holding Company Act and other rules regular banks have to follow.

Under current OCC policy, custody of crypto doesn’t count as a fiduciary activity. Even if state laws say trust companies can hold crypto assets, federal law doesn’t recognize that as fiduciary unless it’s tied directly to estate or trust management.

The associations wrote, “Providing custodial services for digital assets is not a fiduciary activity,” and said granting charters to crypto companies based on custody alone would be a direct break from OCC precedent.

They also cited the now-rescinded Interpretive Letter 1179, which gave the OCC broad power to decide what counts as fiduciary on a case-by-case basis. That letter came after Letter 1176, which allowed the OCC to approve crypto custody under trust charters without public comment.

The groups said that was an unacceptable change to federal banking law. They’re now demanding that the OCC restore a consistent, transparent standard: no fiduciary activity, no trust charter.

Lobbyists warn OCC of systemic risk and copycat firms

The five groups warned that if these crypto applications go through, dozens of other companies will follow. They argued that letting Ripple or Circle operate as trust banks without offering real fiduciary services would create a backdoor into the federal banking system.

That, they said, would create “material risk” for the broader U.S. economy. The lobbyists’ letter reminded the OCC that the banking powers under 12 U.S.C. § 24 (Seventh) were never meant for trust banks. They also pointed out that allowing crypto firms to use § 27(a) for non-fiduciary work would effectively gut the purpose of having trust bank charters in the first place.

If approved, the associations said, the OCC would be setting a precedent that lets companies skirt regulation by calling themselves something they’re not.

None of this is happening in a vacuum. JPMorgan, the country’s biggest bank, is a member of all five associations behind the letter. And just one day before the letter went public, Tyler Winklevoss, co-founder of Gemini, went after JPMorgan yesterday, as Cryptopolitan reported.

“JPMorgan and the banksters are trying to kill fintech and crypto companies,” Tyler said. “They want to take away your right to access your banking data for free via third-party apps like Plaid and instead charge you and fintechs exorbitant fees to access YOUR DATA.”

Tyler also warned that the banks are suing the Consumer Financial Protection Bureau to overturn the Open Banking Rule created under Section 1033 of the Consumer Financial Protection Act, which gives Americans the right to use apps to connect to services like Gemini, Coinbase, and Kraken.

“This is the kind of egregious regulatory capture that kills innovation, hurts the American consumer, and is bad for America,” Tyler wrote. He ended his post accusing Jamie Dimon and his “cronies” of trying to sabotage President Trump’s mission to make the U.S. the global hub for crypto innovation. “We must fight back,” he wrote.

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