Crypto Bank Charter Lawsuit
Community Bankers Sue the OCC Over Nontraditional Crypto Trust Charters
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Key Points
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The lawsuit specifically challenges the OCC’s March 2026 final rule, Interpretive Letter No. 1176, and its conditional approval of Protego Holdings Corp.’s national trust bank charter.
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Interpretive Letter No. 1176, issued in 2021, said a national trust bank could conduct certain non-fiduciary activities when separately authorized under federal banking law.
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The OCC’s 2026 rule followed a January proposal to allow limited-purpose trust banks to engage substantially in non-fiduciary activities; ICBA opposed the proposal and urged the agency to withdraw or revise it.
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ICBA alleges the OCC effectively changed its powers without separate congressional approval, and that the charters let crypto firms avoid some obligations imposed on traditional banks.
Community bankers are suing the Office of the Comptroller of the Currency over crypto bank charters WSJ, arguing the agency broke the law by letting crypto firms and other nontraditional companies get national trust bank licenses. ICBA contends the OCC overstepped its authority and ignored proper legal procedures when expanding who could operate as a bank Cryptopolitan.
The lawsuit targets the OCC's 2026 rule, an earlier guidance letter from 2021, and a conditional charter approval for Protego Holdings Corp. IJR. The community bankers say these actions give crypto companies banking legitimacy and access without the same safety rules applied to traditional banks WSJ.
The OCC's Charter Expansion for Crypto Firms
In 2021, the OCC issued Interpretive Letter No. 1176, saying national trust banks could handle certain non-fiduciary activities if federal law separately allowed them Cryptopolitan. Then in January 2026, the OCC proposed letting limited-purpose trust banks engage heavily in non-fiduciary work — a major shift from traditional banking rules IJR.
By March 2026, the OCC finalized the new rule despite community bankers' strong objections IJR. The regulators also conditionally approved Protego Holdings, a crypto-focused firm, to operate as a national trust bank WSJ.
Community Bankers' Core Legal Arguments
ICBA claims the OCC lacked power to grant these charters without Congress approving it Freedom 96.9. The group says the National Bank Act does not allow trust charters for firms that don't take deposits and don't primarily do fiduciary work — the core job of trust banks IJR.
ICBA also argues the OCC should have used formal rulemaking procedures before expanding the charter scope Cryptopolitan. The lawsuit seeks to void the rule, guidance letter, and Protego's conditional approval entirely WSJ.
Concerns About Unequal Banking Rules
Community bankers worry that crypto firms will sidestep safety obligations imposed on traditional banks WSJ. Getting a national trust charter gives these companies access to the U.S. banking system and added credibility without comparable guardrails IJR.
The dispute reflects a broader clash over how crypto businesses should enter the banking system Cryptopolitan. Traditional banks say they face stricter oversight, capital requirements, and compliance costs that crypto-focused competitors can avoid Freedom 96.9.
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