INTRODUCTION
There is a major deadlock between banking group of the US and Crypto Firms on the Stablecoin Yield Generation by the Crypto Firms to the holders. It is main hurdle in passing and progress of the CLARITY ACT and other Crypto Structure Bills etc. Now, there is another negative development, as major U.S. banks are considering suing regulators over a new policy that makes it easier for crypto and fintech firms to get banking licenses.
The potential lawsuit is being organized by the Bank Policy Institute (BPI) — a lobbying group representing about 40 major U.S. banks, including, JPMorgan Chase, Goldman Sachs and Citigroup etc.
The Office of the Comptroller of the Currency (OCC), the U.S. regulatory authority that grants national bank charters, recently eased rules for firms opting for “national trust bank charters.” It has annoyed and perplexed the US banking Giants.
This easing allows crypto and fintech companies to become federally regulated banks and operate across all U.S. states just like TradFi banks on the US.
More than 10 Companies have filed for or received approvals for national bank charters, include large firms like, Ripple, Fidelity Digital Assets, Circle and BitGo etc.
BANKING GROUP OBJECTIONS
⚡ The recent easing (through IL 1176) gives crypto and Fintech firms rights /powers like TradFi banks but gives crypto companies greater edge of lighter rules and regulations.
⚡ It might adversely affect the progress and growth of the banking Sector in the US. It might undermine financial stability and future growth potential of the banking Sector.
⚡ The OCC new rules change enables crypto and Fintech firms to offer banking services without the same oversight and tougher rules as traditional banks. There should no difference in regulatory oversight.
⚡ The difference widened with crypto firms gaining deeper access to the financial system. Kraken's recent success in getting limited access to the Federal Reserve Payment System a first for a crypto firm has made banking Sector feary of crypto firms entry in TradFi.
📌 The banking group also considers Regulators allowing tokenized securities and blockchain-based assets to be treated similarly to traditional assets as a negative trends for the banking Sector utility and growth potential.
✴️ The banking group also is of the opinion that the rule change was issued without the formal notice and comments required under the Administrative Procedure Act (APA).
CONCLUSION
🛟 Large U.S. banks are preparing to sue regulators (The OCC) because crypto-native firms and Fintech companies may soon be allowed to operate as federally chartered banks, which the banks consider unfair competition and systemic risks to the banking Sector. The banking Sector argue that same oversight, Regulatory and risk management be applied to Crypto firms as that of TradFi Banks.
🔷 Their final decision of suing the OCC might be a very negative development for the Crypto market, crypto /Fintech firms. It might create further volatility, uncertainty and deadlocks. The courts might respond by temporarily staying new approvals, remanding it back to the OCC for review etc
❤️ National Trust Charters are crucial attractive feature to crypto custodians and Infra-structure as it allows full operational clearance in all the 50 US States under a SINGLE FEDERAL LICENSE.
