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Traditional Banks Push U.S. Regulators to Delay Licensing for Digital Asset Firms
Prominent U.S. banking institutions are urging federal regulators to postpone granting banking charters to digital asset companies like Ripple, Circle, and Fidelity, according to a recent report by Daily Hodl dated October 22. This move reflects growing resistance from traditional financial organizations toward the evolving financial landscape driven by blockchain technology and cryptocurrencies.
Banking Groups Call for Delay in Licensing Applications
Last week, key lobbying groups representing banks and credit unions, including the influential American Bankers Association (ABA), submitted a formal letter to the Office of the Comptroller of the Currency (OCC). In the letter, they called for a delay in reviewing applications for national banking charters sought by digital asset firms, citing numerous concerns tied to their operational models and broader policy implications.
Legal and Regulatory Concerns Over Crypto Trust Charters
The lobbying groups specifically flagged significant legal and regulatory issues surrounding digital asset firms seeking trust charters. Their letter stated, “Based on an analysis of the limited publicly available portions of the charter applications, there are substantial legal and policy questions about whether the applicants’ proposed business activities align with the trust functions traditionally performed by national trust banks.”
They argued that granting charters to these firms would represent a "fundamental shift" from existing OCC precedents, requiring comprehensive public input before making such a decision. This statement highlights the ongoing tension between maintaining the status quo and adapting to emerging financial technologies.
Transparency Concerns Surround Digital Asset Charter Papers
One of the key concerns expressed by bank lobbyists revolves around the lack of transparency in applications submitted by notable firms such as Ripple, Circle, Fidelity Digital Assets, and National Digital TR Co. The groups argued that these firms have not provided enough publicly available information to accurately assess their business models, planned operations, or compliance strategies.
Circle, a major player in the stablecoin market, filed for a national trust charter late last month intending to establish the “First National Digital Currency Bank, N.A.” If approved, this entity would oversee the reserves for USDC on behalf of Circle’s U.S.-based issuer. This initiative underscores Circle’s ambitious plans to integrate digital currencies deeper into regulated financial systems.
Ripple’s Entry into Stablecoin Market Marks a Strategic Shift
Similarly, Ripple has demonstrated its growing interest in the stablecoin market. Earlier in October, Ripple submitted its application for a national trust charter as part of its efforts to launch a U.S. dollar-backed stablecoin, RippleUSD (RLUSD). CEO Brad Garlinghouse highlighted Ripple’s dual blockchain approach—RippleUSD would operate seamlessly on both the XRP Ledger and Ethereum (ETH) blockchain, bridging traditional finance and decentralized systems.
The Growing Divide Between Traditional Banking and Crypto Innovation
The clash between traditional banks and emerging digital asset firms underscores the unfolding struggle for market dominance in an era where cryptocurrencies are steadily encroaching on regulated financial markets. As blockchain technology continues to gain acceptance, these debates reflect the broader challenges regulators face in balancing innovation with financial stability.
The outcome of this confrontation could shape the future of the banking sector, with implications for how traditional financial institutions adapt to the rise of blockchain-powered solutions across the U.S. financial market.
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