ICBA is challenging the OCC over crypto trust charters that it says bypass bank safeguards, raising questions for custody and lending firms.
The Independent Community Bankers of America has sued the Office of the Comptroller of the Currency, arguing that the OCC has let crypto firms enter the federal banking system through a lighter form of national trust charter.
For a crypto holder, the dispute is about more than the name attached to a company. Custody, trading and lending firms using these charters may operate outside many of the rules that apply to traditional banks, according to ICBA. That includes federal deposit insurance and some state consumer protections.
ICBA filed the lawsuit on Friday, October 2, in the U.S. District Court for the District of Columbia. It targets an OCC final rule issued on March 2 and the agency's Interpretive Letter No. 1176.
The banking group's statement says Congress did not create national trust charters as a side door for crypto firms seeking the credibility of a federal bank charter without its obligations. Those obligations include the Community Reinvestment Act, consolidated supervision, capital and liquidity standards, and FDIC insurance.
Rebeca Romero Rainey, ICBA's president and CEO, also argues that the OCC has exceeded its authority by allowing companies to obtain national trust charters while conducting substantial activities that are not fiduciary in nature.
The complaint was filed under the Administrative Procedure Act. Yahoo Finance's report on the case says ICBA is asking the court to declare the final rule and interpretive letter unlawful.
The full filing was not available to this newsroom, so the specific counts and the amount of damages sought could not be confirmed. The case rests on more than ICBA's criticism of the OCC's approach to crypto firms. The group is also challenging the conditional approval of Protego Holdings Corp.'s national trust bank charter.
A national trust bank that does not take deposits falls outside much of the federal financial regulation that applies to community banks. Its charter also preempts many state regulations, including consumer protection laws, according to ICBA.
That distinction matters when a customer entrusts a crypto firm with assets. The charter can give a company the appearance of operating inside the federal banking system without providing the same set of safeguards that a customer receives from an insured depository institution.
ICBA says digital assets held by a crypto company operating under a national trust charter do not receive those federal protections. Traditional banks are also subject to capital, liquidity and supervision requirements that ICBA says trust banks do not face to the same degree.
The banking group describes the result as a "gaping hole in financial regulation." That is ICBA's position, not a conclusion reached by a court.
Protego received conditional approval for its national trust charter in February 2026. The company provides digital asset custody, trading, lending and issuance, according to ICBA.
The banking group said it opposed the approval because Protego had severely flawed risk and control functions. ICBA also said Protego's governance structures lacked independent oversight and that the OCC did not respond to those concerns.
Protego laid off most of its workforce in 2023 and later faced vendor lawsuits over unpaid bills, resulting in judgments against the company. ICBA cited that history in arguing that its charter should be vacated.
Those allegations matter because custody and lending depend on controls governing an institution's finances and management. The lawsuit asks the court to remove Protego's approval, but ICBA has not shown that the court will decide the issue before the charter becomes final.
The OCC has cleared applications or received applications from several digital-asset companies, including Circle, Ripple, Paxos, Fidelity, BitGo, Payward, Block and World Liberty Financial. Their applications are at different stages, and the materials reviewed do not confirm the status of every application.
Other trust banks linked to crypto include Erebor, Coinbase, Circle and Crypto.com. The charter structure also has a recent precedent outside the group targeted by ICBA. In September, the OCC granted OpenReserve Bank a full national bank charter, rather than a trust charter. OpenReserve is backed by Andrechen Horowitz, Jump Capital and Coinbase Ventures.
The distinction is important. A full national bank charter and a national trust charter are not the same route into the banking system. ICBA is focusing its lawsuit on the latter.
Sen. Elizabeth Warren has also called the OCC's trust-charter approvals illegal, a claim the industry disputes. Her criticism of World Liberty Financial's approval went further, accusing the OCC of permitting presidential corruption.
The OCC declined to comment on the litigation. A spokesperson said the agency does not comment on litigation.
Industry advocates are not uniformly opposed to crypto companies entering banking. The Bank Policy Institute supports bringing new financial products into the regulated banking system, but says firms doing traditional banking should face the same rules and responsibilities as other chartered institutions. It also says companies conducting banking activities should seek full-service charters.
The immediate target is Protego's conditional approval. A ruling against the OCC could force the agency to reconsider the charter and its treatment of activities that go beyond traditional fiduciary work.
A broader ruling could affect the legal foundation for national trust charters used by crypto custody, trading and lending firms. It could also strengthen the case for requiring firms that perform banking-like activities to obtain a full national bank charter instead.
For asset holders, the practical question is simpler: the word "bank" on a provider's website does not by itself establish that customer assets carry the same protections as cash held at an FDIC-insured bank. ICBA is asking the court to draw a firmer line between those two systems.
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