ICBA warns that Kraken’s bid for OCC charter threatens U.S. bank deposits and financial stability

ICBA Asks OCC to Rescind Interpretive Letter 1176 After Filing of Kraken Trust Charter

Payward Inc., Kraken’s parent company, has filed an application with the Office of the Comptroller of the Currency (OCC) for a national trust bank charter. The app comes after Kraken gained access to a Federal Reserve master account and during congressional debates. stable coin legislation that would expand crypto direct access for businesses to the federal banking system.

ICBA President and CEO Rebeca Romero Rainey explained, in a statement shared with Bitcoin.com News Monday that the app is part of a pattern. Cryptocurrency businesses seek payment stable coinsmaster account access and national trust charters at the same time, she argued, without facing the same regulatory requirements as banks. This is not the first time the ICBA has issued such a response, having made similar statements in March.

Romero Rainey warned policymakers that these combined measures create new channels of instability and could pull deposits out of community banks, reducing lending to consumers, small businesses and farmers.

ICBA requests that the OCC suspend review of Kraken’s application, rescind Interpretive Letter No. 1176, and initiate formal rulemaking to clarify what the trust’s national charter actually allows. The group argues that the OCC’s change under this interpretive letter allows non-bank fintech companies to receive a traditional trust charter while engaging in activities that the charter was never intended to cover.

The ICBA recently issued a cautionary note warning policymakers of the cumulative impact of promoting multiple crypto-related policy initiatives simultaneously. The dissertation is titled “ StablecoinsNational Trust Master Accounts and Charters: Community Bankers Call for Pause on Irresponsible Entity Policies.

CLARITY Act and performance Stablecoins Under fire

This reaction is not limited to community bankers. Rob Nichols, president and CEO of the American Bankers Association, sent a letter to bank CEOs on May 10, 2026, calling for immediate engagement ahead of the Senate Banking Committee’s planned vote on the CLARITY Act, a digital asset market structure bill.

Nichols urged bankers to contact senators directly through the ABA’s popular platform, mobilize staff and customers and push for stronger language to end what banks call a stable coin loophole. Concern focuses on ‘interest-like rewards’ linked to payment stable coinswhich banks say could accelerate the flight of deposits, whether those returns are paid directly or through affiliates.

Banking groups, including the ABA and the Bank Policy Institute, have also argued that this deposit flight would reduce consumer and business lending on a large scale. They support an almost total ban on performance-like payments linked to stable coinsand they argue that a recent compromise by Senators Tillis and Alsobrooks does not go far enough to prevent fraud.

The other side of the debate paints a different picture. Stable coins like USDC and USDT are often backed by short-term Treasury bills or cash equivalents and have offered their holders about 4 to 5 percent in recent rate environments, well above most traditional checking or savings accounts. Supporters argue that this gives ordinary Americans more direct access to market rate returns without relying on banks.

Some economists and crypto advocates have pointed to research suggesting that the expected impact on bank deposits remains modest on the current scale, and they present bank lobbying as an effort to protect interest rate margins rather than address true systemic risk. The banks counter that on a larger scale, particularly for community institutions, the effect on loans would be significant.

Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, responded to the ABA CEO’s letter on social media.

“I specifically requested the participation of Mr. Nichols and other banking CEOs in the meetings we held in February to resolve the issue of stablecoin rewards and yield. They refused,” Witt wrote on X. The senior government official added:

“I guess the White House was beneath them? In their defense, I wouldn’t want to have to defend their position in public either.”

The vote on the CLARITY law remains the immediate focal point. Banks have lobbied against the coins’ stable yield features since previous versions of the legislation, including the GENIUS Act. Expect continued amendments and debate before the final vote moves forward.

The Kraken OCC application and the CLARITY Act are now at the center of a broader question: Whether crypto companies can access the federal banking system on their own terms, or whether Congress and regulators will require them to follow the same rules as banks before such access is granted.