The nation’s largest crypto firms are looking to consolidate their power to the detriment of their customers and communities already lacking vital consumer protections and economic development opportunities.
As more and more digital currency companies are vying for financial legitimacy by becoming a national trust bank via the Office of the Comptroller of the Currency (OCC), a growing chorus of organizations are raising concerns about what will likely manifest into more financial issues for low- to moderate-income (LMI) Americans.
NCRC has recently formally opposed several national trust bank charter applications from stablecoin and cryptocurrency firms due to their often unregulated and exploitative operations and the larger implications on community development. Other financial institutions and financial reform organizations across the spectrum (from traditional banking institutions to consumer rights advocates to locally owned and operated community banks) have also sounded the alarm on the dangers this could pose to communities as well.
What is a national trust bank charter?
A bank charter is a business license for an institution looking to provide bank-like services. Companies wanting to engage in banking activity may obtain a bank charter at either the state or federal level via a banking regulatory body.
There are multiple different types of bank charters, some of which convey more regulatory accountability than others. The type that cryptocurrency firms are seeking – known as a national trust bank charter – comes with less stringent oversight and fewer public protections than a layperson might expect from something with the word “bank” in its name.
“National trust banks are not subject to the full set of regulations that are generally applicable to commercial banks,” the Congressional Research Service wrote in a 2022 analysis.
Stablecoin and cryptocurrency companies’ newfound interest
Currently, cryptocurrency companies and other nonbank financial institutions have to utilize third party intermediaries to manage their investments, protect their assets and accomplish other fiduciary activities given that they don’t have the regulatory permissions to do so on their own. However, gaining national trust bank status would provide sought-after legitimacy as well as allow “[t]he players who voluntarily step into regulation, get the proper licenses and build the right structure… [to] be the ones institutional capital flocks to,” as crypto analyst Patrick Thompson puts it.
Congress gave the OCC the federal authority to grant national trust bank charters in the National Bank Act of 1863-64, with the understanding that the resulting trust companies would focus on fiduciary activities—such as acting as a trustee or executor—as well as asset custody. The law intentionally separated such activities from traditional banking functions like taking deposits or making loans.
Two recent changes have resulted in a surge in national trust bank charter applications from stablecoin companies. First, a 2021 change in the OCC’s trust bank charter creation policy called Interpretive Letter #1176 provided an operational requirement loophole by taking the position that a national trust bank may engage in any permissible activities of a trust company, not just fiduciary duties. This includes non-fiduciary custody of assets, which is critical for stablecoin issuers and crypto custodians.
Second, in July 2025, Congress passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), which explicitly authorizes nonbank payment stablecoin issuers to operate under federal oversight and recognizes OCC-chartered trust banks as an eligible structure for compliance purposes.
Previously, cryptocurrencies were considered securities that were regulated by the US Securities and Exchange Commission (SEC). By removing legal uncertainty around stablecoin issuance and expanding OCC authority to include these issuers, the GENIUS Act creates a pathway for crypto companies to apply for a national bank charter. However, as emphasized in recent comment letters submitted by NCRC, the Independent Community Bankers Association, the Bank Policy Institute and Americans for Financial Reform, it is questionable whether OCC has the authority to grant a national trust bank charter to stablecoin issuers:
“Congressional intent, plain reading of the statute, and current regulations only grant the [OCC] authority to grant national trust bank charters to institutions that perform these narrow fiduciary activities and only these narrow fiduciary activities.” In contrast, crypto companies applying for the national trust bank charter propose to engage in activities that go beyond fiduciary activities, including processing payments and issuing private stablecoin currencies.
The negative impacts on vulnerable communities
Multiple cryptocurrency companies that have filed for national trust bank charters, such as Circle, Coinbase, Ripple and Crypto.com have long track records of unethical business practices that should give the OCC serious pause in allowing them more freedom to operate in the financial services space. There are a whole host of consequences to the exploitation of the national trust bank charter model not only for national and global financial markets, but for communities already dealing with compounding financial pressures.
Lost reinvestment opportunities back into communities
National trust banks are not subject to the Community Reinvestment Act (CRA), meaning that they would gain the reputational and operational benefits of this new designation but shoulder none of the corresponding community development requirements to serve the credit needs of LMI communities.
“Banks power the economy by turning deposits into loans,” wrote Weston Loyd, vice president, head of media relations and third party engagement with the Consumer Bankers Association (CBA). “Incentivizing a shift from bank deposits and money market funds to stablecoins would end up increasing lending costs and reducing loans to businesses and consumer households.”
As noted in multiple comment letters from NCRC, “This diversion of capital away from entities with a community reinvestment obligation represents a fundamental departure from the principle that federally chartered institutions should serve public purposes, not merely private profit.”
Since customers of stablecoin companies tend to keep those funds in that form instead of depositing them and these nonbanks aren’t required to keep deposits received within the US banking system, vital funding for community and economic development opportunities would be diverted from CRA-regulated traditional banking institutions.
“The [trust bank charter] applicants propose to engage in activities such as managing stablecoin reserves, facilitating payments and taking deposits. These activities closely mirror core banking functions,” according to the Bank Policy Institute (BPI). “[Y]et the applicants would avoid obtaining deposit insurance, nor would they be subject to consolidated supervision and consumer protections and other safeguards required of full-service national banks and their parent companies.”
Will create more structural risks to financial systems
Given the volatile, unpredictable nature of digital assets, this regulatory grey zone that stablecoin companies seek to inhabit only leaves more room for risky behavior to the detriment of consumers and the larger financial system.
“Recent failures of major crypto-platforms demonstrate the risk of wholesale loss of customer assets absent deposit insurance and resolution mechanisms,” according to Michael Emancipator, senior vice president and regulatory counsel with Independent Community Bankers of America (ICBA). “A charter that legitimizes such activities without equivalent safeguards exacerbates systemic vulnerability for all participants in the financial system.”
These concerns have united traditional banking institutions in formally opposing the expansion of national trust banking charters to stablecoin firms. “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,” a July 2025 joint comment letter to the OCC by America’s Credit Unions, ICBA, CBA, the National Bankers Association and the American Bankers Association said, “then… other companies will follow, presenting material risk to the U.S. banking and financial system.”
No obligation to avoid deceptive practices in setting fees
The OCC’s current National Bank Charges regulation gives national banks – including trust banks – the authority to establish and charge non-interest fees and charges to its customers. Noticeably absent from this regulation is any requirement to consider consumer impact when setting fees and charges.
The National Bank Charges regulation does not prohibit unfair, deceptive or abusive acts and practices, leaving consumers vulnerable to extractive and hidden fees with no recourse or without any meaningful consequences for trust banks. This regulatory gap is especially troubling in the context of several recent stablecoin company trust bank charter applicants, who have a history of regulatory violations and enforcement actions. Some of these issues are outlined in NCRC’s recent comment letters on the topic.
Lack of adequate regulatory requirements and internal controls will allow fraud to grow
The regulatory framework that cryptocurrency firms and stablecoin entities are currently governed by is already sorely lacking when it comes to preventing fraudulent activities against consumers. Several of these same companies looking to attain national trust bank charter status have been rife with fraud and cybercrime claims.
The sector’s money laundering problems have continued despite pledges to shape up, according to new reporting from the International Consortium of Investigative Journalists. Additionally, stablecoin now accounts for 63% of all illicit crypto transactions.
The Financial Action Task Force (FATF), a global finance crime watchdog group, has cautioned that the growing rate of illicit financial activities happening on the crypto industry’s watch is something that could have far-ranging impacts. “With virtual assets inherently borderless, regulatory failures in one jurisdiction can have global consequences,” said the FATF in a recent Reuters article.
Mounting fraud losses and the growing use of private stablecoins as the currency of choice for fraudsters and money launderers is a universal concern that NCRC has highlighted in several comment letters and that other industry trade groups, like ICBA and BPI, have raised issues with as well.
The importance of community development requirements for nonbanks
Being granted a national trust bank charter has historically been a privilege bestowed on financial entities operating at the highest standards and in the best interests of its stakeholders and the public. Given that stablecoin and cryptocurrency institutions would be permitted new capabilities to take deposits and issue currency akin to traditional banking institutions, it would stand to reason that they should also be held accountable to the same federal regulatory and community reinvestment standards as well.
“Applying community development obligations to nonbank stablecoin issuers would likely drive billions of dollars into needed community and economic development projects and initiatives,” wrote Kevin Hill, NCRC’s senior policy advisor. “In 2023 alone, banks originated over $127 billion in loans that met the CRA’s definition of community development for LMI communities and households.”
The Community Reinvestment Act mandates that traditional banking institutions equitably serve the credit needs of all communities in this country. If cryptocurrency exchanges and stablecoin issuers want to reap the full monetary and societal benefits of becoming a national trust bank, then they need to reinvest into the communities that they will be extracting value from.
Timantha Goff is the Managing Editor & Writer for NCRC’s Communications team.
Photo credit: Traxer via Upsplash.
