Newsletter
The Independent Community Bankers of America ( Independent Community Bankers of America ) have filed a lawsuit against the Federal Reserve Board of Governors of the United States ( OCC ) in the Federal Court of District of Columbia, questioning its authority to grant national trust bank charters to crypto companies, and requesting the court to repeal a rule from March 2026 and Interpretation Letter No. 1176.
The CEO of the association, Rebeca Romero Rainey, stated that these regulations allow crypto companies to gain the credibility of a federal bank without being constrained by FDIC insurance, capital standards, or the Community Reinvestment Act; the lawsuit also seeks to revoke the conditional regulations of Protego.
This lawsuit has escalated a ongoing dispute surrounding OCC. Companies such as Circle, Ripple, Kraken's parent companies, as well as World Liberty which is associated with Trump, are all seeking to comply with the articles of association of OCC.
US community banks are suing the country's top banking regulator in court over the practice of regulatory agencies issuing bank charters to cryptocurrency companies, claiming that these agencies have crossed the boundaries of authority set by Congress.
On Friday, the Independent Community Bankers Association filed a lawsuit against the Federal Reserve Board in the United States District Court for the District of Columbia, challenging its authority to issue national trust bank charters to crypto companies. The lawsuit, brought under the Administrative Procedure Act, focuses on the final rule dated March 2, 2026, related to Interpretation Letter No. 1176 of OCC, and seeks a court ruling that both measures are unlawful.
The focus of the dispute is the national trust charter. The industry organization claims that OCC has turned it into a “backdoor for crypto companies to enter the banking system.”
President and CEO Rebeca Romero Rainey believes that allowing companies to obtain such charters to carry out a large number of non-trusted activities "exceeds the authority granted to that institution by Congress"; yet these companies have obtained the credibility of federal bank charters without the obligations of the Community Reinvestment Act, comprehensive regulation, capital and liquidity standards, and the FDIC insurance constraints imposed on deposit insurance companies.
The organization also warned that there are gaps in consumer protection, pointing out that digital assets held by crypto companies operating under trust charters do not enjoy the federal protections that customers expect from licensed banks. The lawsuit argues that such charters, while subject to lighter regulation, also exclude many state consumer protection laws.
The complaint specifically names Protego Holdings, alleging deficiencies in its governance and risk control. As a result, ICBA hopes that the court will revoke its conditional articles of association.
As crypto companies flock to OCC, this competition has further intensified. The institution has approved or received applications from a wave of digital asset companies, including Circle, Ripple, Paxos, Fidelity, BitGo, the parent company of Kraken which is Payward, Block of Jack Dorsey, as well as World Liberty Financial that is associated with Donald Trump.
Senator Elizabeth Warren has previously also stated that these approvals are illegal, and the industry has raised objections to this claim.
At the time of this lawsuit, OCC was racing against time to finalize the regulations for stablecoins under the GENIUS Act, with the goal of completing it by November. This has also added a new front to the debate over to what extent cryptocurrencies should be integrated into the federal banking system.
