XRP: Ripple Faces OCC Opposition Over Bank Charter

XRP is once again in the spotlight as Ripple’s pursuit of a national bank charter faces mounting resistance from traditional banking groups and the Office of the Comptroller of the Currency (OCC). Ripple, along with stablecoin issuer Circle, is under intense scrutiny as a coalition of banking associations urges federal regulators to halt crypto firms’ entry into the financial system through federal charters.

On Thursday, top financial trade bodies, led by the American Bankers Association (ABA), submitted a formal letter to the OCC arguing that applications from crypto-native firms like Ripple lack adequate transparency and legal clarity. The letter warned that approving such licenses could represent a dramatic shift from longstanding federal policy, especially as it pertains to fiduciary operations and public accountability.

The joint correspondence, which included input from numerous credit union and banking associations, emphasized the lack of crucial information in these applications. Without this data, the public and regulators alike face difficulties in making informed assessments. The central concern is whether companies like Ripple genuinely qualify for the national trust bank designation, traditionally reserved for institutions providing fiduciary services such as wealth and trust management.

“There are serious legal and policy uncertainties about whether the applicants’ business plans align with fiduciary standards traditionally upheld by national trust banks,” the trade groups asserted.

Ripple’s offerings, particularly in crypto custody and blockchain-based payment technology, fall outside the conventional scope of fiduciary activity. The groups argue that granting charters to such players without inviting public comment would circumvent established regulatory frameworks developed over decades.

Ripple and Circle’s Charter Bid Challenges the Financial Status Quo

If Ripple and Circle are successful in acquiring federal banking licenses, they would be empowered to operate across all U.S. states under a single supervisory framework. This change would eliminate the need for securing individual state-by-state licenses for money transmission — a move seen by crypto proponents as critical for scaling operations and improving efficiency.

However, traditional institutions argue this streamlining could destabilize the financial landscape. There are fears that crypto-native firms might offer banking services—like payments and asset custody—with less rigorous capital requirements, potentially undermining existing protections. The document described such a shift as one that “could pose material risks to the U.S. financial system.”

Veteran crypto advocate Caitlin Long, founder of Custodia Bank, chimed in on the situation via an X post, calling the traditional finance sector’s resistance “an interesting reaction.” Long speculated that if chartering crypto firms provides operational advantages, traditional banks may themselves seek similar conversions to streamline their regulatory overhead and enhance competitiveness.

Ongoing Regulatory Shifts and Ripple’s Strategic Moves

Ripple’s efforts come on the heels of several regulatory shifts at the national level. The GENIUS Act, recently discussed in Congress, introduces a license tailored specifically for stablecoin issuers. However, experts argue that many crypto firms—including Ripple—engage in operations that exceed the scope of such a limited charter.

According to blockchain law specialist Logan Payne, forward-thinking platforms like Ripple may be pursuing broader toolkits for regulatory compliance and operational efficiency. “Most stablecoin issuers conduct business that goes beyond the new license’s limited scope,” he said, suggesting that a full banking charter offers more flexibility amidst rapid market changes.

Ripple’s aspirations are not occurring in isolation. Industry giants such as Fidelity and Circle are likewise pursuing federal banking licenses. The move signals a broader trend in which crypto enterprises are seeking to embed themselves deeper into the regulated financial environment, aiming for greater legitimacy and streamlined market access.

Alexander Grieve, head of government affairs at Paradigm, a leading crypto venture capital firm, summed up the status quo well when he said, “Credit unions and banks rarely agree on anything. But they seem united in pushing back against crypto entering their space.”

Related: XRP Price: $12M Max Pain for Bears

As regulatory frameworks evolve, Ripple’s push for a federal charter could significantly influence the future landscape of financial services and crypto adoption alike. But whether it ultimately secures approval may depend on whether it can satisfy regulators’ concerns about fiduciary standards and systemic risk.