The Independent Community Bankers of America sued the Office of the Comptroller of the Currency in federal court on Friday, asking judges to strike down the framework that let Coinbase, Circle and other crypto firms set up federally chartered banks. The trade group, which represents community lenders, filed under the Administrative Procedure Act in the US District Court for the District of Columbia.
The complaint challenges a chartering rule the OCC finalized in March and Interpretive Letter 1176, issued in January 2021, which ICBA says opened the door for crypto companies to enter the banking system through the national trust charter. It names Comptroller Jonathan Gould as a defendant and asks the court to vacate the conditional charter held by Protego, one of the first crypto trust banks approved under the framework.
“American consumers reasonably expect a federally chartered bank to carry federal protections,” ICBA president Rebeca Romero Rainey said in a statement. “Digital assets held at a crypto firm operating under a national trust charter do not carry those important safeguards.” She added that the group is asking the court to return the OCC to its statutory limits.
What national trust charters skip
A national trust bank generally takes no deposits, makes no conventional loans and holds no federal deposit insurance. Community banks say that is exactly the problem: they face capital rules, liquidity standards, Community Reinvestment Act obligations and consolidated supervision, while crypto trust banks can operate inside the banking system without any of it. In ICBA’s words, the framework “perversely regulate[s] trust banks far more lightly than traditional banks,” letting firms “engaged in highly risky cryptocurrency and digital assets activities” into the system. The group argues this creates an uneven playing field where chartered crypto firms get federal legitimacy without equivalent obligations.
The complaint counts 21 trust bank approvals and says 13 of them have ties to the crypto industry. American Banker, which obtained the filing, reports that charters have gone to World Liberty Financial, the Trump family linked firm, alongside conditional approval for Coinbase and a full charter for Circle, the issuer of USDC. Crypto.com has also pursued OCC approval for its custody and staking services.
The rule at the center
The chartering rule the banks attack took effect in April. The OCC’s regulations had referred to banks performing “fiduciary activities.” The new language speaks of “the operations of a trust company and activities related thereto,” and the agency described the change as a clarification of existing authority rather than an expansion or restriction. ICBA calls it an expansion of powers Congress never granted, one that creates what the group describes as “a gaping hole in financial regulation.”
Interpretive Letter 1176 dates from January 2021, when the OCC confirmed that national banks could provide cryptocurrency custody and execution services. Later that year the agency granted Anchorage Digital the first federal bank charter issued to a crypto company. The queue continued under a series of OCC leaders, and the current framework allows firms that focus on digital assets to operate as national trust banks as long as they perform some fiduciary work. An OCC spokesperson said the agency does not comment on litigation, according to CoinDesk.
What happens to the approvals
A win for ICBA would not close banks overnight, but it could invalidate the rule the approvals rest on. If the court agreed with the banks, existing chartered firms would have to seek state charters or wait for Congress to settle crypto policy. Anchorage, the most visible chartered firm, would sit in that queue like everyone else. Defenders of the framework note that trust banks still face examination by the OCC itself, and the agency has allowed them to operate without deposit insurance because of what their charters do, which is custody rather than lending.
The fight lands in the middle of a year when crypto firms have pushed hard into traditional banking. The SEC put out custody rules for investment advisers on October 1, with a compliance cost estimate of $433,833 a year that small advisers called excessive, while larger firms scale up. Treasury’s first binding stablecoin rule under the GENIUS Act took effect September 30, splitting oversight of issuers at a $10 billion asset line. Exchanges, issuers and custodians are building toward a payments market that regulators expect to run through banks, and the Citi-Coinbase arrangement announced this week is one example of what that looks like in practice.
Community banks have opposed these charters since the first ones appeared in 2021. This case is the first to ask a court for a remedy, and it targets the two foundations the approvals rest on, the March rule and the 2021 letter. Whatever happens to Coinbase, Circle or the others in the queue now depends on a judge reading the National Bank Act.
The deposit argument
Romero Rainey’s statement takes aim at what she calls a legitimacy gap as much as a rule gap. Her point is that consumers see a federal charter and assume FDIC-style protection follows, which is not true for national trust banks. Crypto firms could therefore benefit from a public perception that outruns the actual safeguards, something the complaint describes as relying on a government imprimatur while dodging the obligations that come with it.
The lawsuit also raises the deposit flight question. If trust banks could eventually take deposits or offer near-equivalent services, community banks argue they would lose balance sheet share to lightly regulated competitors. Trust bank charters today stop short of deposits, so that risk sits in the future tense, but the banks want the legal boundary clarified before anyone tests it. A ruling either way would settle what a trust charter can and cannot grow into, and that answer would shape the next round of charter applications more than the approvals already granted.