Community Banks Sue OCC Over Crypto Trust Licenses

A coalition of community banks has filed suit against the Office of the Comptroller of the Currency, challenging the agency’s authority to grant trust licenses to crypto companies, in a case that puts the OCC’s expanding role in digital asset oversight directly at the center of a regulatory turf dispute with traditional lenders.

The lawsuit targets trust charters the OCC has conditionally issued to crypto-focused firms, with the bank plaintiffs arguing the agency exceeded its statutory authority under the National Bank Act by extending trust powers to non-depository entities operating primarily in digital asset markets. The legal theory is an Administrative Procedure Act challenge, contending the OCC’s licensing decisions were arbitrary and should be vacated, consistent with the APA challenge brought against OCC Interpretive Letter 1176.

The OCC’s trust charter grants federally supervised status to an institution, allowing it to offer custody, fiduciary, and related services. For crypto companies, a conditional trust charter functions as a pathway into regulated financial infrastructure, positioning licensed firms to compete with banks for custody and settlement business. Community banks argue that allowing crypto firms to access this federal licensing framework without meeting the same deposit-taking, capital, and compliance requirements they face creates an unlevel competitive field. The plaintiffs contend that OCC-licensed crypto custodians can market federal oversight as a credibility signal while operating under materially lighter regulatory burdens.

The challenge also carries a jurisdictional argument: that the OCC’s authority to grant trust charters was designed for traditional banking institutions, and that extending it to crypto-native companies requires explicit congressional authorization rather than agency interpretation. The lawsuit asks the reviewing court to set aside the licenses at issue and constrain the OCC’s use of trust-charter authority going forward.

Crypto firms that have received or are pursuing conditional OCC trust charters face the prospect that a court ruling could rescind their federal licenses, forcing them back to state-level trust regulation or removing their federal supervisory status entirely. Crypto.com’s conditional OCC trust bank approval illustrates the type of license now under legal scrutiny. A ruling against the OCC would narrow the federal licensing path for crypto custody providers at a moment when the industry is actively seeking regulated status to attract institutional clients. Conversely, a ruling upholding the OCC’s authority would affirm the agency’s capacity to serve as a federal regulator for digital asset firms without waiting for new legislation.

The suit arrives as Congress debates the scope of crypto regulation, wit