Community Bankers Sue OCC Over Crypto Trust Bank Charters
Bankers group files federal lawsuit against OCC crypto charter policy
The Independent Community Bankers of America sued the Office of the Comptroller of the Currency on October 2, asking a federal court to overturn the regulator's framework for chartering crypto trust banks and to cancel Protego's conditional approval.
The complaint was filed in the U.S. District Court for the District of Columbia. It names the OCC and Comptroller Jonathan Gould as defendants.
ICBA argues that the National Bank Act restricts non-deposit-taking trust banks to fiduciary services and related activities. Fiduciary services involve managing assets on behalf of clients with a legal duty to act in their best interests. The group says the OCC has allowed a much broader range of crypto businesses under its current policy.
What the lawsuit seeks to undo
ICBA is asking the court to set aside two key OCC policies: a March 2026 chartering rule and a 2021 interpretive letter. The group also wants the court to block the OCC from using either policy to grant or conditionally approve new charters.
The lawsuit specifically targets Protego's conditional approval but does not seek to cancel every existing crypto trust charter. That distinction matters for other companies currently using the same regulatory path.
The OCC announced conditional approvals in December 2025 for Ripple National Trust Bank, BitGo, Fidelity Digital Assets, and Paxos. Several other applications are still pending, including those from zerohash National Trust Bank, Payward National Trust Company, and EDX Trust.
The injunction ICBA is requesting would prevent future approvals that rely on the challenged policies, rather than impose a blanket ban on all crypto applicants.
Competing readings of what trust banks can do
The heart of the dispute comes down to how broadly to interpret a national trust bank's powers.
In January 2021, the OCC issued a letter stating that national trust banks did not need to operate primarily in a fiduciary capacity. In March 2026, the OCC finalized a rule that replaced the term "fiduciary activities" in its chartering regulation with "operations of a trust company and activities related thereto." The rule took effect on April 1, 2026.
The OCC's published rationale says the rule did not expand its authority. The agency argues that national trust banks have long performed non-fiduciary custody and safekeeping services, and that the wording change simply aligns the regulation with the statute. The OCC also noted that the question of whether a trust bank must perform a minimum amount of fiduciary activity was left outside the scope of the rulemaking.
ICBA filed three counts under the Administrative Procedure Act, challenging the 2026 rule, the 2021 letter, and Protego's approval. Beyond arguing that the OCC exceeded its statutory authority, ICBA says the agency failed to adequately address risks and objections raised by commenters. The group also contends the 2021 letter should have gone through public notice and comment before being issued.
Protego's proposed digital trust bank
Protego's conditional approval illustrates the practical stakes of the disagreement. In a February 13 conditional-approval letter, the OCC outlined Protego's planned National Digital Trust Company, which would offer crypto custody, trading, lending, and tokenization services alongside fiduciary services such as discretionary staking and treasury management.
The approval came with financial conditions. Protego must maintain at least $15 million in tier 1 capital and hold a separate liquid-asset buffer covering 180 days of operating expenses during the bank's first three years. The OCC also expressly withheld final authorization to commence business until all preopening requirements are met.
Why this matters for crypto and banking
The lawsuit escalates an ongoing tension between traditional community banks and crypto firms seeking access to the U.S. banking system.
ICBA argues that the OCC's framework allows crypto companies to compete nationally with community banks while avoiding requirements that apply to traditional depository institutions, such as deposit insurance. The outcome could affect not just Protego but all crypto firms pursuing or holding conditional approvals under the current OCC policy.
What happens next
The case will proceed through the federal court system. No timeline for a ruling has been announced.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.