Crypto banking belongs inside the federal regulatory perimeter

Chris Ratcliffe/Bloomberg

A U.S. bank charter has always been a public-private compact: If you want access to the nation’s financial infrastructure, you accept rigorous supervision in return. That compact hasn’t changed. What has evolved is the range of firms and technologies now performing core 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 supervised perimeter of U.S. prudential oversight, or leave it to operate outside our regulatory regime.

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

This process should also be welcome news for policymakers and banking professionals. It reflects the principle Comptroller Gould emphasized recently at the Blockchain Association’s Policy Summit: Chartering new banks — including those engaged in digital asset activities — is core to a healthy, competitive U.S. banking system. He said the OCC has seen a notable uptick in charter applications this year and that the federal banking system must adapt to “new ways of conducting the very old business of banking” or risk stagnation and irrelevance. Comptroller Gould recognizes that this is an opportunity for the U.S. banking industry to recover from the sharp decline in new federal bank charter applications following the 2008 financial crisis, a contraction that has reduced competition, concentrated market power and ultimately harmed consumers.

Yet some large banks are pushing back, arguing that allowing digital asset firms into the chartered system could heighten systemic risk or amount to regulatory favoritism. Their tired perspective 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 conflating national trust bank charters with full-service commercial banking. National trust charters are limited-purpose, authorizing some of these institutions to provide services such as custody, settlement, trade execution and stablecoin issuance. The charters do not allow deposit-taking 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 permit the risky practice of credit intermediation. They bring significant activities under direct prudential supervision — from governance and capital to custody controls and cybersecurity — without the balance-sheet risk associated with traditional banks. 

A modern chartering framework should be activity-based and technology-neutral. Custody is custody. Payments are payments, which includes “payments stablecoins” that are permitted to be issued by national banks under the recently passed and bipartisan GENIUS Act. Whether these functions are executed on legacy rails or distributed ledgers should not determine access to prudential oversight.

Critics who argue that digital asset charters somehow tilt the regulatory playing field overlook two truths. First, these approvals aren’t special treatment — they follow standard procedures and conditions under 12 C.F.R. Part 5, not expedited or exceptional pathways. Second, excluding digital asset activity from supervision does not reduce risk; rather, it drives risk 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 firms into chartered banking threatens stability. But competition has historically been central to U.S. banking policy, enhancing resilience and consumer choice. New chartered institutions expand services, introduce efficiencies and press incumbents to improve. In that sense, supervision and competition are mutually reinforcing.

Blocking entrants because they use innovative technology is not risk management — it is protectionism, pure and simple. That approach cedes regulatory ground to offshore actors and leaves American consumers with fewer options under U.S. 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: Bring meaningful financial activity inside the regulated system under supervision, or leave it outside regulators’ sight lines.

By supervising firms willing to meet prudential standards, we protect consumers, reinforce market integrity, and ensure the U.S. banking system remains dynamic and competitive. Supervision, not exclusion, is how we safeguard stability and advance innovation.