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Community banks sue US regulator over crypto trust charters

Community banks sue US regulator over crypto trust charters

Rule Changes

Trade group says crypto firms get federal trust charters without bank-level oversight

October 5th, 2026: Rain files for national trust bank charter

Overview

Updated Oct 21

A trade group for community banks sued the U.S. banking regulator on Oct. 2 over federal trust charters granted to crypto firms. The Independent Community Bankers of America says the Office of the Comptroller of the Currency has exceeded its authority under the National Bank Act.

Two firms filed for trust charters three days later: stablecoin payments platform Rain and Modern Treasury, which wants to custody stablecoins and fiat alongside its payments software. The OCC has approved or conditionally approved 21 national trust charters under the Trump administration, at least 13 of them for crypto companies.

Why it matters

If crypto trust charters survive, digital asset firms keep federal credibility without deposit insurance, capital rules, or consumer protections.

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Key Indicators

21
National trust charters approved under the Trump administration
At least 13 went to crypto companies, according to the ICBA lawsuit.
$10B
Stablecoin issuance cap for state-qualified issuers
The GENIUS Act caps state-qualified stablecoin issuers at $10 billion, making federal trust charters more attractive.
0
OCC-managed uninsured bank receiverships in nearly 100 years
The ICBA argues the OCC has no recent experience managing failures of uninsured non-depository banks.
2
New charter applications since the lawsuit
Rain and Modern Treasury both filed on Oct. 5, three days after the ICBA sued.

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People Involved

RR
Rebeca Romero Rainey
President and CEO, Independent Community Bankers of America
Leading the legal challenge against the OCC
PP
Paige Pidano Paridon
Executive vice president and co-head of regulatory affairs, Bank Policy Institute
Expressed support for the ICBA's position
 Farooq Malik
Farooq Malik
CEO and co-founder, Rain
Filed for national trust bank charter
 Jonathan V. Gould
Jonathan V. Gould
Comptroller of the Currency
Named defendant in the ICBA lawsuit

Organizations Involved

Independent Community Bankers of America
Independent Community Bankers of America
Trade association
Plaintiff in the lawsuit against the OCC

Trade group representing community banks across the United States.
Office of the Comptroller of the Currency
Office of the Comptroller of the Currency
Federal Agency
Defendant in the lawsuit

Independent bureau within the Treasury Department that charters and supervises national banks.
PH
Protego Holdings Corp.
Digital asset company
Hold conditionally approved national trust bank charter

Digital asset firm providing custody, trading, lending, and issuance services.
Bank Policy Institute
Bank Policy Institute
Banking policy organization
Supports stricter standards for trust charters

Research and advocacy group representing large banks.
Rain
Rain
Nonprofit social services provider
Applied for national trust bank charter

Stablecoin payments platform that filed for a national trust bank charter on Oct. 5, 2026.

Timeline

2021 October 2026

7 events Latest: October 5th, 2026 · 1 month ago
Tap a bar to jump to that date

  1. Rain files for national trust bank charter

    Latest Regulatory

    Payments platform Rain applied for a national trust bank charter to custody digital assets and issue stablecoins, three days after the ICBA lawsuit.

  2. Modern Treasury applies for trust charter

    Regulatory

    Payments software firm Modern Treasury filed for a national trust charter to custody stablecoins and fiat. Like Rain's proposed bank, it would not take deposits or make loans.

  3. ICBA files lawsuit against OCC

    Legal

    The Independent Community Bankers of America sues the OCC in U.S. District Court for the District of Columbia, asking the court to vacate the final rule and Protego's charter.

  4. OCC issues final rule on trust bank charters

    Regulatory

    The OCC finalizes a rule related to Interpretive Letter No. 1176, formalizing its authority to charter national trust banks for crypto firms.

  5. OCC conditionally approves Protego charter

    Regulatory

    The OCC grants Protego conditional approval for a national trust bank charter despite ICBA opposition.

  6. Protego lays off most of its workforce

    Business

    The digital asset firm cuts most staff and faces vendor lawsuits over unpaid bills, resulting in judgments against the company.

  7. Anchorage Digital gets first crypto national trust charter

    Regulatory

    Anchorage Digital becomes the first crypto company to receive a national trust charter from the OCC.

Scenarios

1

Court strikes down OCC trust charter rule

Possible Resolves by End of 2027

Discussed by: Legal analysts and community banking groups

The D.C. District Court finds the OCC exceeded its National Bank Act authority by chartering national trust banks that conduct substantial non-fiduciary activities. The court vacates the March 2026 final rule and Interpretive Letter No. 1176, and potentially Protego's charter. Crypto firms with conditional charters would need to seek state-level charters or apply under a different framework.

2

Court upholds OCC charter authority

Possible Resolves by End of 2027

Discussed by: The OCC and crypto industry

The court applies Chevron-style deference or finds the OCC's interpretation of the National Bank Act reasonable, allowing the trust charters to stand. Crypto firms keep their federal charters, and the regulatory path remains open for future applicants.

3

Congress passes crypto charter legislation

Unlikely Resolves by End of 2027

Discussed by: Legislative observers

The GENIUS Act created the current incentives for crypto firms to seek federal trust charters. Congress could pass follow-up legislation either restricting the charters or formalizing them, potentially short-circuiting the court case or making it moot.

4

OCC approves Rain's national trust bank charter

Possible Resolves by Oct 6, 2027

Discussed by: Rain and the OCC

The OCC could approve Rain's application, giving the payments platform a federal trust charter to custody digital assets and issue stablecoins. The decision would come amid the ICBA's legal challenge to the charter framework.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

2005-2007

Walmart's industrial loan company bid (2005)

Walmart applied in 2005 for an industrial loan company charter in Utah, which would have allowed the retailer to operate a bank while avoiding many federal banking regulations. Community banks and Congress pushed back, and the FDIC held hearings on the application.

Then

The FDIC imposed a moratorium on industrial loan company applications in 2006, freezing the charter path for non-bank applicants.

Now

Walmart withdrew its application in 2007, and the industrial loan company charter remained effectively closed to commercial firms for over a decade.

Why this matters now

Shows the pattern of non-bank entities seeking special charters to enter banking with lighter oversight, and the pushback from the banking industry when they do.

1980s

The savings and loan crisis (1980s)

Deregulation in the early 1980s let savings and loan associations make riskier investments with government-insured deposits. More than 1,000 institutions failed by the end of the decade.

Then

The cleanup cost U.S. taxpayers over $100 billion and forced the Resolution Trust Corporation to liquidate failed institutions.

Now

Congress passed the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which tightened S&L regulation and created new oversight bodies.

Why this matters now

Illustrates what can happen when institutions gain bank-like charters without the full regulatory framework applied to traditional banks.

Sources

(14)
+8
Reuters Wall Street Journal Independent Community Bankers of America American Banker CoinDesk Bitcoin.com News The Company Chronicle Crypto Times The Brief Crypto News The Stablecoin Banker Banking Dive Orrick InfoBytes CoinDesk