• ICBA has sued the OCC and Comptroller Jonathan Gould over national trust bank charters
• The group says the OCC has approved or conditionally approved 21 trust charters, including 13 involving crypto companies
• ICBA argues crypto trust banks receive regulatory advantages over traditional community banks
• The lawsuit seeks to invalidate key OCC policies and rescind Protego’s charter approval
• Crypto industry representatives say the action threatens innovation and competition
• Gould insists the OCC assesses whether applicants have a reasonable chance of success 

The Independent Community Bankers of America has sued the Office of the Comptroller of the Currency over its growing use of national trust bank charters, escalating an industry battle over how cryptocurrency companies should be allowed into the regulated banking system.

The lawsuit, filed Friday in federal court in Washington, D.C., alleges the OCC and Comptroller Jonathan Gould have “far exceeded” the agency’s statutory authority by approving charters for companies that are neither traditional deposit-taking banks nor fiduciary trust businesses.

ICBA argues the policy creates regulatory gaps while giving crypto companies advantages unavailable to conventional community banks.

“This vast expansion of power creates a gaping hole in financial regulation,” the trade group said in its complaint, which was filed under the Administrative Procedure Act.

ICBA is asking the court to invalidate an OCC rule and interpretive letter underpinning the agency’s approach and rescind the national trust bank charter approval granted to cryptocurrency company Protego Holdings Corp.

The OCC declined to comment on the litigation.

The dispute follows a rapid expansion in trust charter approvals during President Donald Trump’s second administration.

According to ICBA, the OCC has approved or conditionally approved 21 national trust bank charters, including 13 involving cryptocurrency companies.

The trade group argues such charters enable companies to preempt numerous state requirements while avoiding federal obligations imposed on traditional depository institutions, including Federal Deposit Insurance Corp. assessments and Community Reinvestment Act requirements.

ICBA said two member banks, each with less than $2.5 billion in assets, spend approximately $1.5 million annually meeting regulatory requirements.

It alleges both have already lost hundreds of thousands of dollars in business this year to cryptocurrency companies conditionally approved for national trust charters.

ICBA President and CEO Rebeca Romero Rainey said Congress did not establish the national trust charter “as a side door into the banking system.”

“Any non-fiduciary firm seeking the benefits of a federal bank charter should meet the same standards as community banks,” she said.

The lawsuit particularly challenges an OCC rule adopted in March and a 2021 interpretive letter issued by Gould during the first Trump administration.

“There is no statutory basis for the OCC’s position that it can charter crypto trust banks that are neither depository nor fiduciary,” ICBA argued.

Protego, which received conditional charter approval in February, also came under direct attack. ICBA alleged the company has experienced “severe financial problems” and appears to lack sufficient capital and liquidity support.

The crypto industry has rejected ICBA’s broader argument. Crypto Council for Innovation CEO Ji Hun Kim characterized the lawsuit as an attempt to resist competition and payments innovation, arguing that restricting banking to established business models would not eliminate demand for new financial services.

Gould has previously defended the OCC’s approach, arguing regulators should not operate with “zero risk tolerance.”

“The statute talks about a reasonable chance of success,” he said in May. “That’s how we evaluate applications.”

The court battle could now help determine how far the OCC can extend the national banking framework to digital-asset companies – and whether crypto firms seeking federal charters must face regulatory obligations comparable with traditional banks.