A coalition for community banks has opened a direct challenge to the federal policy that lets cryptocurrency companies enter the banking system through national trust charters.
The Independent Community Bankers of America filed its case in federal court in Washington on Friday, arguing that the Office of the Comptroller of the Currency stretched the National Bank Act beyond its limits. The complaint targets a March rule, related agency guidance and the conditional charter granted to Protego Holdings.
The dispute turns on what a trust bank may actually do. Traditional trust institutions hold or manage assets in a fiduciary capacity. Crypto applicants, by contrast, have sought charters for custody, payments, stablecoin and other digital-asset businesses. Because these institutions do not take insured deposits or make conventional loans, they do not sit inside the full regulatory structure that applies to ordinary banks.
The bankers say that difference creates both a competitive imbalance and a risk of public confusion. A federal charter can look like a broad government guarantee even when the institution has no deposit insurance and is not subject to the same capital, liquidity, community-lending or consolidated-supervision rules.
The OCC has been moving in the opposite direction, treating the trust charter as a route for financial innovation and granting a series of preliminary approvals. It did not offer a response to the new litigation.
The case is an Administrative Procedure Act challenge, not a claim that any particular crypto company has defrauded customers. The banks want the court to invalidate the rule and interpretive letter, and to set aside Protego’s approval. Its result could define how far a bank regulator may extend an old chartering power into a market Congress did not contemplate when the statute was written.
Case announcement · OCC rulemaking record
