ICBA Warns Kraken OCC Charter Bid Threatens US Bank Deposits and Financial Stability

"Payward Inc., the parent company of Kraken, filed an application with the Office of the Comptroller of the Currency (OCC) for a national trust bank charter. The application arrives after Kraken secured access to a Federal Reserve master account and as Congress debates stablecoin legislation that would expand crypto firms' direct reach into the federal banking system."

"Romero Rainey explained, in a release shared with Bitcoin.com News on Monday, that the application is part of a pattern. Crypto firms are pursuing payment stablecoins, master account access, and national trust charters at the same time, she argued, without facing the same regulatory requirements as banks."

"Romero Rainey warned policymakers that together these moves create new channels for instability and could pull deposits away from community banks, cutting into lending for consumers, small businesses, and farmers. The ICBA is asking the OCC to pause consideration of Krakens application, rescind Interpretive Letter No. 1176, and begin a formal rulemaking to clarify what the national trust charter actually permits."

"The group argues the OCC's shift under that interpretive letter allows nonbank fintech companies to receive a traditional trust charter while engaging in activities the charter was never intended to cover. The ICBA recently published an issue brief warning policymakers about the cumulative impact of advancing multiple crypto-related policy initiatives."

Payward Inc., Kraken’s parent company, applied to the Office of the Comptroller of the Currency for a national trust bank charter after Kraken obtained access to a Federal Reserve master account. ICBA President Rebeca Romero Rainey warned that crypto firms are pursuing payment stablecoins, master account access, and national trust charters together while avoiding regulatory requirements applied to banks. She said these combined moves could create new channels for financial instability and pull deposits away from community banks, reducing lending to consumers, small businesses, and farmers. ICBA urged the OCC to pause the application, rescind Interpretive Letter No. 1176, and start formal rulemaking to clarify what the national trust charter permits. Banks also warned stablecoin yield features could drain deposits at scale.

Read at news.bitcoin.com