Banks Should Compete With Crypto. Blocking Its Path Into Banking Is the Wrong Answer.

Crypto companies are applying for federal supervision. A banking lobby is suing to challenge the framework that lets them obtain it.

That is the tension behind the Independent Community Bankers of America’s October 2 lawsuit against the Office of the Comptroller of the Currency and Comptroller Jonathan Gould.

ICBA wants a federal court to overturn the OCC’s national trust bank chartering rule and related guidance. It also seeks to reverse Protego’s conditional charter approval. The challenge could have broader implications for the route pursued by companies including Coinbase, Ripple and Circle.

There are legitimate legal questions for the court to resolve. But the policy principle should be straightforward: companies that can meet appropriate standards deserve a fair opportunity to compete.

Blockster’s position is that banking needs more competition. Protecting customers should mean demanding better services and sound safeguards from every provider, including new ones.

A Federal Charter Is a Route Into Oversight

In its announcement of the lawsuit, ICBA argues that the OCC has exceeded its authority by granting national trust charters to companies conducting substantial non-fiduciary activities.

The group says these firms can gain the credibility of a federal bank charter without facing the same obligations as insured deposit-taking banks. Its concerns include consumer protections, regulatory requirements and the absence of FDIC insurance for digital assets.

Those distinctions matter. Customers should understand exactly who holds their money, what protections apply and what happens if a provider fails.

But different business models also need to be assessed on their actual activities and risks. A company safeguarding digital assets is not necessarily doing the same job as a bank taking deposits and using them to fund loans.

Coinbase made that distinction in its April announcement of conditional OCC approval. Its proposed trust company would support custody and market infrastructure, without taking retail deposits or engaging in fractional-reserve banking. The company said federal oversight would bring greater consistency to those services.

Brian Armstrong put the objective plainly in his April 2 X post:

“We’re bringing the infrastructure of crypto under federal regulatory oversight.”

That deserves weight in this debate. Crypto companies pursuing charters are asking to operate within a federal supervisory framework. Their applications should face serious scrutiny, with a workable path to approval when they satisfy the requirements.

𝕏Post from @brian_armstrongView the original post on X↗

Competition Is a Reason to Modernize

The OCC has already articulated a stronger vision for banking competition.

In his December 2025 remarks to the Blockchain Association Policy Summit, Gould said:

“We believe that innovation, competition, and fair access should always triumph over regulatory stagnation.”

In the same speech, he said new entrants and established banks should face the same high standards where their activities and risks are comparable.

That is a sensible basis for regulation: examine the service, identify the risk and set the standard.

The OCC reiterated its support for new entrants in an August 11 post promoting competition and innovation in banking.

𝕏Post from @USOCCView the original post on X↗

This post preceded the lawsuit and describes the agency’s broader approach to new bank formation.

The commercial conflict is explicit in ICBA’s complaint. It argues that crypto trust banks could compete for customers and assets while operating under different regulatory requirements.

Competition will create pressure. That is precisely how customers gain bargaining power.

If an established bank’s service is expensive, cumbersome or poorly suited to digital commerce, a new competitor gives it a reason to improve. An outdated business model should not become the benchmark that every new provider must reproduce.

Community banks have valuable relationships and local knowledge. They can build on those strengths, adopt new technology and offer better products. A healthy market should reward that response.

Stablecoins Make the Stakes Bigger Than Crypto Trading

The charter debate reaches the institutions supporting digital money.

When Circle announced its conditional approval, it described a trust bank that would oversee management of the USDC reserve and offer institutional digital-asset custody under OCC supervision. The charter strategy was tied directly to the infrastructure behind its stablecoin.

The OCC’s December 2025 approvals also included Ripple, BitGo, Fidelity Digital Assets and Paxos. The agency said it applied rigorous review and assessed each application on its merits.

For businesses considering digital-dollar payments, the reliability of those underlying institutions matters. Custody, reserve management and supervision are part of making the technology usable at scale.

The answer should be clear standards, enforceable protections and honest disclosures. Stablecoin users should never be led to believe their tokens carry FDIC insurance simply because a related company has a trust charter.

At the same time, regulation should leave room for financial services to improve. Giving customers more credible providers can strengthen the market and push established institutions to move faster.

The court will decide whether the OCC has acted within its legal authority. The agency says its 2026 rule clarifies longstanding powers; ICBA disputes that interpretation. Filing the lawsuit does not itself revoke Coinbase’s or Ripple’s approvals.

Our editorial position is clear: crypto firms should have a lawful, demanding and achievable path into federally supervised finance. Banks should win customers by serving them better.