Several US banking associations have pushed against the issuance of a banking license to crypto custody firms, citing a need for public input in such a change in industry policy, among other reasons. This development comes as the cryptocurrency industry continues to gain more recognition in the US following a wave of encouraging policies signed by US President Donald Trump.
Crypto Custody Not Fiduciary Duty, Doesn’t Warrant Bank Status: US Banks
On July 17, five banking associations including the American Bankers Association (ABA), Consumer Bankers Association (CBA), National Bankers Association (NBA), America’s Credit Unions, and Independent Community Bankers of America (ICBA) submitted a joint statement to the US Office of The Comptroller of The Currency (OCC) urging intense scrutiny over recent applications to the National Bank Trust Charter by multiple crypto custody companies.
In particular, the letter mentions applications by National Digital TR CO, Fidelity Digital Assets, NA, First National Digital Currency Bank, N.A., and Ripple National TR Bank, which are all seeking to obtain approval from the OCC to operate as national banks.
According to the letter by the concerned banking associations, there is a lack of sufficient public information on these applications and their intended business, which would support their claims for a banking license. These US banks explain that the circulating redundant information on these applications prevents proper public scrutiny needed to make an accurate public commentary.
Therefore, they nudge the OCC to release more information on the business plans of these crypto custody firms while also extending the deadlines for public discussion.
Furthermore, these associations state that custody services do not qualify as a fiduciary responsibility granted by the National Bank Trust Charter under existing OCC regulations. They explain that granting a banking license to such a business would mark a significant change in OCC policy that also requires a public review period.
However, the association emphasizes the need to restrict the National Bank Trust Chart to only institutions that have with fiduciary duty, stating that an approval of these applications by mere crypto custody firms results in significant policy, operational, and commercial implications for the US banking industry.
The statement read:
If the Applicants are successfully able to establish themselves as national trust banks that do not primarily provide fiduciary services, but instead provide traditional banking services like payments, then, as the Associations anticipated in 2021,15 other companies will follow, presenting material risk to the U.S. banking and financial system
Crypto Market Overview
At the time of writing, the total crypto market cap is valued at $3.82 trillion following a 1.03% decline in the past day. The premier cryptocurrency, Bitcoin, retains an unparalleled dominance with a reported market share of 61.1%. However, a recent price decline coupled with exploding altcoin surges suggests this dominance may wane in the future, with a potential altseason on the cards.
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