U.S. community bank group sues OCC, calling crypto trust bank charters unlawful
Coinyong
ICBA sued the OCC in federal court in Washington, D.C. on Oct. 2.
The group seeks to have the March 2 chartering rule and Interpretive Letter 1176 declared unlawful.
It also asks the court to vacate Protego's conditional charter; the OCC declined to comment.
The Independent Community Bankers of America (ICBA), a trade group for small U.S. community banks, sued the Office of the Comptroller of the Currency (OCC) in federal court in Washington, D.C. on Oct. 2, arguing that the regulator exceeded the authority Congress gave it when it opened a path for crypto firms to enter the banking system as national trust banks without deposit insurance or bank-level capital rules. The case, No. 1:26-cv-03441, has been assigned to Judge Carl J. Nichols.
The ICBA is challenging the final chartering rule the OCC announced on Feb. 27 and published in the Federal Register on March 2, along with Interpretive Letter No. 1176, on which the rule rests. The group asked the court to declare both unlawful and to vacate the conditional trust bank charter granted to Protego, a crypto custody and trading company.
A 'side door' or long-standing authority
Independent Community Bankers of America (ICBA)
The national trust charter was created for fiduciary work, holding and managing assets on behalf of others. The National Bank Act gives no basis for chartering companies that neither take deposits nor primarily conduct fiduciary activities. Such trust banks are not subject to Community Reinvestment Act obligations, consolidated supervision of their parent companies, capital and liquidity standards or FDIC insurance.
Office of the Comptroller of the Currency (OCC)
The final rule aligns the regulation's wording with the statute allowing trust banks to conduct the operations of a trust company and "activities related thereto," and would "neither expand nor contract" its chartering authority. Comptroller Jonathan V. Gould said in December 2025, when the agency conditionally approved five crypto-focused trust banks, that "new entrants into the federal banking sector are good for consumers, the banking industry and the economy."
The OCC told CoinDesk it "does not comment on litigation." The final rule has been in effect since April 1.
"Congress did not create the national trust charter as a side door into the banking system for crypto firms seeking the credibility of a federal bank charter."
Rebeca Romero Rainey, ICBA President and CEO
The group said national trust banks that do not take deposits fall outside much of federal financial regulation, while the federal charter preempts many state rules, including consumer protection laws. "American consumers reasonably expect a federally chartered bank to carry federal protections. Digital assets held at a crypto firm operating under a national trust charter do not carry those important safeguards," Romero Rainey said.
Protego, the company whose charter the bankers want vacated
Protego is based in Seattle. On Feb. 13, the OCC granted preliminary conditional approval for its subsidiary, National Digital Trust Company. According to the approval letter, the trust bank plans four business lines: crypto custody, trading, lending and borrowing, and issuer services. Final approval will come only after all pre-opening requirements are met.
The ICBA said Protego laid off most of its workforce in 2023 and faced lawsuits from vendors for failing to pay its bills, resulting in judgments against the company. The group also said in its press release that the OCC had never before chartered a national bank that neither took deposits nor engaged in fiduciary activities, and that it has not managed an uninsured bank receivership in nearly 100 years.
A year of new crypto trust banks
On Dec. 12, 2025, the OCC conditionally approved de novo charters for Ripple National Trust Bank and First National Digital Currency Bank, as well as the conversions of BitGo, Fidelity Digital Assets and Paxos from state trust companies into national trust banks. The agency said that once they meet the conditions, they would join roughly 60 existing national trust banks under its supervision.
This year, Stripe-affiliated Bridge National Trust Bank (Feb. 12), Protego (Feb. 13) and Foris DAX National Trust Bank, tied to the parent of Crypto.com (Feb. 20), won conditional approval in February, followed by World Liberty Trust Company on Aug. 14. According to the ICBA press release, Protego is the only charter the group has asked the court to vacate.
The ICBA had opposed the rule before it was finalized. In a Feb. 11 comment letter to the OCC, the group urged the agency to withdraw or amend the proposal to fit its statutory authority and to halt processing of pending and new charter applications in the meantime. The OCC then conditionally approved three trust banks between Feb. 12 and Feb. 20 and announced the final rule on Feb. 27.
XRP, the token associated with Ripple, traded at 2,029 won on Korean exchange Upbit and at $1.4913 on Binance around 10:30 a.m. KST on Oct. 3. Converted to won, the Binance price was about 2,009 won, leaving the Upbit price roughly 1% higher.
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