Crypto’s encroachment on TradFi has upset a number of US financial firms after companies such as Circle and Ripple applied for banking licences.
Fidelity Digital Assets is also among the crypto companies that have submitted applications to receive bank licences from the US Office of the Comptroller of the Currency (OCC).
Approval would allow them to be their own bank, settle payments and be regulated at the federal level. The American Bankers Association, and other trade groups argue that any greenlight for these firms would carry significant “policy and process concerns.”
Time out
In a 17 July letter addressed to OCC leadership banking lobbyists urged the agency to delay any decisions on the crypto firms’ applications. They argue that these proposals represent a significant departure from traditional banking frameworks and warrant greater public scrutiny.
“A postponement would allow time and, hopefully, sufficient information for the public to meaningfully assess the applications and the novel issues they present,” the lobbyists said in the letter.
Coming wave?
The GENIUS Act, which establishes the first set of rules governing the issuance of stablecoins, has come as a major boon for the crypto industry. As a result, crypto firms looking to enter the stablecoin market now face direct competition from established mainstream banks, which have also signaled growing interest in issuing stablecoins.
With both sides now eyeing stablecoin issuance, the question of who is permitted to function as a bank has become increasingly prominent in Washington.
The Trump administration now faces key questions stemming from the hallmark legislation regarding the intersection between crypto and traditional banking regulations that may reshape the future of the financial services industry.
