Banking Coalition Declares War: Circle, Ripple, and Fidelity in Limbo
On July 17, 2025, a coalition of United States banking groups, led by the American Bankers Association (ABA), jointly sent a letter to the Office of the Comptroller of the Currency (OCC), requesting a delay in approving bank charter applications from crypto firms, including Circle, Ripple, and Fidelity Digital Assets.
The letter argues that issuing national bank charters to crypto companies would be a “fundamental departure” from established traditional banking policy, citing concerns over transparency, regulatory consistency, and potential systemic risks to the United States financial system.
Traditional Banks Calls for Pause to Crypto’s Banking Charter Bid
The ABA, alongside organizations like the Independent Community Bankers of America, stated that crypto companies’ business models lack traditional fiduciary services, such as serving as trustees or estate administrators, which are core to banking operations.
The letter criticizes the applications for providing insufficient details, complicating regulatory assessment review. It calls for a public notice and comment period to ensure strict evaluation, warning that approvals could destabilize the financial system if non-traditional companies follow suit.
The OCC has recently addressed crypto-related banking activities. On March 7, 2025, it issued Interpretive Letter 1183, clarifying that national banks can engage in crypto-asset custody, certain stablecoin activities, and distributed ledger participation.
On July 14, 2025, the OCC, alongside other agencies, released a joint statement regarding risk-management factors for banks holding crypto-assets, identifying potential vulnerabilities.
All of these actions show the cautious regulatory stance in terms of crypto’s integration into traditional banking.
GENIUS Act Stirs Debate Over Crypto’s Banking Role
The banking groups’ pushback has triggered industry responses from crypto industry figures. On July 19, 2025, Custodia Bank founder Caitlin Long posted on X, suggesting that trust charters sought by crypto companies could function as “de facto bank charters” with reduced capital requirements, potentially leading to litigation.
Alexander Grieve, head of government affairs at Paradigm, noted on X that banks and credit unions are united in their concern over competitive threats from crypto firms.
The controversy comes at a time when the GENIUS Act was signed into law on July 17, 2025.
The legislation allows stablecoin issuers to seek bank charters, making them bypass and become independent of state licensing and expand financial operations.
Crypto analyst Logan Payne noted that the law could drive more crypto firms to seek charters, further increasing controversy and tensions.
Crypto’s Bid for Legitimacy
The OCC’s decision on these charter applications will decide crypto’s role in the United States banking system.
A delay or denial could be a setback for crypto companies’ efforts to legitimize their operations and access faster payment systems, potentially affecting innovation while protecting traditional banks.
Approvals could also increase competition but would raise concerns about systemic stability.
The GENIUS Act and rising competitive pressures are a sign of a complex future. The banking lobby’s demand for transparency shows the overall unease about digital assets, while crypto companies seek regulatory legitimacy.
