US banking groups are pushing for a delay in granting bank licenses to crypto companies like Circle and Ripple, citing concerns about policy and process changes. The groups argue that the public lacks sufficient information to assess the firms’ proposed business models. Circle, Ripple, and Fidelity Digital Assets are among the crypto firms seeking OCC banking licenses, which would allow them to operate as their own banks, settle payments faster, and be regulated at a federal level.

The banking groups are asking the OCC to halt the approval of charter bids by crypto firms, as their applications lack transparency for public scrutiny. They argue that the proposed business models of these firms are not aligned with traditional fiduciary activities performed by national trust banks. Granting charters to these firms could pose a significant risk to the US banking and financial system.

Caitlin Long, founder of Custodia Bank, notes the possibility of litigation over whether trust charters can serve as de facto bank charters with reduced capital requirements. This development could lead banks to convert to trust companies to maintain existing businesses with lower capital requirements and regulations. Venture firm Paradigm’s government affairs head, Alexander Grieve, highlights the increasing competition between traditional banks and crypto firms.

Crypto-focused lawyer Logan Payne explains that stablecoin issuers in the US may seek banking licenses under the newly passed stablecoin laws to expand their operations beyond issuing stablecoins. The GENIUS Act’s stablecoin license limits activities to issuing stablecoins, prompting issuers to apply for national trust bank charters with the OCC to engage in a broader range of activities without obtaining state-level money transmission licenses.

Read more at Cointelegraph: Bank Groups Urge OCC Delay Allowing Crypto Bank Charter Bids