The crypto-bank belongs to the federal regulatory perimeter

Chris Ratcliffe/Bloomberg

The charter of American banks has always been a public-private pact: if you want access to the country’s financial infrastructure, you accept rigorous supervision in return. This pact has not changed. What has evolved is the range of companies and technologies that are now successful. essential functions of the financial system. Payments, custody, settlement and reserve management increasingly rely on digital infrastructure, including blockchain-based systems.

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The question is not whether crypto banking exists but whether we bring this activity inside the monitored perimeter of American prudential supervision, or let it operate outside our regulatory regime.

Last monththe Office of the Comptroller of the Currency conditionally approved five national trust bank charter applications from digital asset companies – First National Digital Money Bank (Circle), Ripple, BitGo, Fidelity Digital Assets and Paxos – under the same charter standards applied to all applicants. The OCC previously granted a trusted national bank charter to Anchorage Digital in 2021, and I applaud Comptroller Gould for prioritizing these digital asset-focused institutions.

This process should also be good news for policymakers and banking professionals. It reflects the Gould controller principle highlighted recently at the Blockchain Association policy summit: Chartering new banks – including those engaged in digital asset activities – is essential to a healthy and competitive U.S. banking system. He said the OCC has seen a notable increase in charter applications this year and that the federal banking system must adapt to “new ways of doing the very old banking business” or risk stagnation and irrelevance. Controller Gould recognizes that this is an opportunity for the U.S. banking industry to recover from the sharp decline in applications for new federal banking charters following the 2008 financial crisis, a contraction that reduced competition, concentrated market power and ultimately harmed consumers.

Yet some major banks oppose it, arguing that allowing digital asset companies into the chartered system could increase systemic risk or amounted to regulatory favoritism. Their tired view retreads arguments Wall Street banks deploy whenever they face new competition, framing competitive concerns as threats to financial stability.

A central misconception in this debate is confusing national trust bank charters with comprehensive commercial banking services. National trust charters serve a limited purpose, authorizing some of these institutions to provide services such as custody, settlement, trade execution, and issuance of stablecoins. The charters do not authorize depository and lending activities that have led to bank failures and taxpayer-funded bailouts.

This distinction has practical significance. These charters granted by the OCC do not allow the risky practice of financial intermediation. They place important activities under direct prudential oversight – from governance and capital to custody controls and cybersecurity – without the balance sheet risk associated with traditional banks.

A modern charter framework must be activity-based and technology-neutral. The guard is the guard. The payments are payments, which include “stablecoin payments” that can be issued by national banks under the recently passed, bipartisan GENIUS Act. Whether these functions are executed on existing rails or on distributed ledgers should not determine access to prudential supervision.

Critics who claim that digital asset charters tip the regulatory scale overlook two truths. First, these approvals do not constitute special treatment: they follow standard procedures and conditions. 12 CFR Part 5no accelerated or exceptional routes. Second, excluding activity on digital assets from oversight does not reduce risk; instead, it drives risks outside the U.S. regulatory perimeter, where regulators have less visibility and fewer tools to protect consumers and economic stability.

Some argue that allowing crypto companies access to chartered banks threatens stability. But competition has always been at the heart of American banking policy, strengthening consumer resilience and choice. Newly accredited institutions are expanding their services, introducing efficiencies and putting pressure on licensees to improve. In this sense, surveillance and competition are mutually reinforcing.

Blocking entrants because they use innovative technology is not risk management – ​​it is protectionism, pure and simple. This approach cedes regulatory ground to offshore players and leaves American consumers with fewer options under American supervision.

As stablecoin adoption grows and federal agencies implement the GENIUS Act, we must recognize that digital asset services are already part of the financial ecosystem. The choice before us is simple: integrate significant financial activity into the regulated system under supervision, or leave it outside the regulators’ field of vision.

By overseeing businesses willing to comply with prudential standards, we protect consumers, strengthen market integrity, and ensure that the U.S. banking system remains vibrant and competitive. Oversight, not exclusion, is how we preserve stability and advance innovation.