American community bankers are taking regulators to court.
An independent community bankers association filed a lawsuit in federal court in Washington, D.C., this Friday, targeting a nationwide trust bank charter issued by the Office of the Comptroller of the Currency (OCC). At the heart of the dispute is a rule that took effect in March this year: it allows holders of trust charters to conduct a large amount of non-trust business, which the association argues exceeds the authority granted by Congress.
These charters have been approved quickly over the past year. Public records show that 21 institutions have received, or been conditionally granted, trust charters—13 of them related to the cryptocurrency industry. The complaint names one of them and seeks to revoke its license, while also stopping further approvals under that rule and a 2021 interpretive letter.
The real crux of the controversy is a line of demarcation. The value of a trust charter lies in the words “trustee” and “trust.” Money and assets are handed to the trustee for management, and this rule sets the corresponding capital, liquidity, deposit insurance, and consumer protection standards. The path by which crypto firms obtain such charters typically sidesteps the limits on trust-related activities, while also avoiding the corresponding regulatory obligations. The association’s chair has described this route as a back door into the banking system.
The next thing to watch is how the court will define the scope of “trust business.” The complaint is currently only arguing the matter; no ruling has been issued yet. #监管 #加密金融
An independent community bankers association filed a lawsuit in federal court in Washington, D.C., this Friday, targeting a nationwide trust bank charter issued by the Office of the Comptroller of the Currency (OCC). At the heart of the dispute is a rule that took effect in March this year: it allows holders of trust charters to conduct a large amount of non-trust business, which the association argues exceeds the authority granted by Congress.
These charters have been approved quickly over the past year. Public records show that 21 institutions have received, or been conditionally granted, trust charters—13 of them related to the cryptocurrency industry. The complaint names one of them and seeks to revoke its license, while also stopping further approvals under that rule and a 2021 interpretive letter.
The real crux of the controversy is a line of demarcation. The value of a trust charter lies in the words “trustee” and “trust.” Money and assets are handed to the trustee for management, and this rule sets the corresponding capital, liquidity, deposit insurance, and consumer protection standards. The path by which crypto firms obtain such charters typically sidesteps the limits on trust-related activities, while also avoiding the corresponding regulatory obligations. The association’s chair has described this route as a back door into the banking system.
The next thing to watch is how the court will define the scope of “trust business.” The complaint is currently only arguing the matter; no ruling has been issued yet. #监管 #加密金融
