Banks Consider Legal Action Over OCC Crypto Licensing Rules

Some of the largest banks are reportedly weighing legal action against a regulator over concerns that new licensing policies could allow crypto and fintech firms to enter the banking system with fewer safeguards, The Guardian reports.

The Bank Policy Institute (BPI), which represents around 40 major lenders, including JPMorgan Chase, Goldman Sachs, and Citigroup, is considering whether to sue the Office of the Comptroller of the Currency (OCC).

At the center of the dispute is the OCC’s reinterpretation of federal licensing rules, which has effectively made it easier for crypto companies and fintech startups to obtain a national bank trust charter. Such a license allows firms to operate across all 50 US states under a single federal framework.

Traditional lenders argue that granting these charters risks allowing digital-first firms to operate within the financial system without the same level of supervision and controls required of fully licensed banks. Banking groups and state regulators are understood to have repeatedly warned the OCC about the potential risks to consumers and the wider financial system.

The potential legal challenge comes amid a broader wave of applications from crypto firms and digital-first financial platforms seeking national bank status. Companies including PayPal, Coinbase, Paxos, and Circle are among those pursuing chartered licenses that would bring them under federal banking supervision.

The surge in applications has already prompted concern across the banking industry. In February, the American Bankers Association urged the OCC to pause approvals for new charters while lawmakers and regulators continue to shape the rules governing stablecoins and other digital assets.

In a letter to the regulator, the group warned that approving applications before those frameworks are fully defined could introduce new risks and weaken the transparency standards that have long underpinned the US banking system.