US Bank Regulator Sued Over Crypto Firm Charters by Community Bank Advocates (coindesk.com) 7
A U.S. banking group just sued the government agency that issues America's federal bank charters, reports CoinDesk, "accusing it of exceeding its legal powers in granting national trust-bank status to crypto firms."
The agency's move "creates a gaping hole in financial regulation," according to the lawsuit by The Independent Community Bankers of America, one of America's largest banking advocacy organizations. It argues the move will "perversely allow entities engaged in highly risky cryptocurrency and digital assets activities to enter the banking system under lightly regulated national charters" which actually preempt many state regulations, including consumer protection laws. But the move would also "place community banks at a severe competitive disadvantage," the lawsuit argues, "by allowing the national trust banks to offer many of the same services as community banks without complying with the same costly banking laws and regulations that apply to the community banks." This competitive advantage could "siphon deposits out of community banks and into deposit alternatives like cryptocurrency," which they describe as "highly volatile, prone to market crashes, cybercrime, and fraud" and lacking protections like deposit insurance.
They also warn that America's Office of the Comptroller of the Currency "has not managed an uninsured bank receivership in nearly one hundred years. But failures of risky uninsured national trust banks could spread instability throughout the nation's financial system, including by spreading contagion risks to other traditional banks like community banks."
CoinDesk reports: [The Independent Community Bankers of America] also played a significant role in pushing back against the Digital Asset Market Clarity Act that failed to advance in the U.S. Senate last month — in part due to the bankers' objections that its stablecoin provisions didn't protect them against direct competition with the deposit accounts that are core to their businesses.
Now, the group is targeting the trust charters crypto firms are pursuing as an entry point into the U.S. banking and payments system. "Congress did not create the national trust charter as a side door into the banking system for crypto firms seeking the credibility of a federal bank charter," ICBA President and CEO Rebeca Romero Rainey said in a statement..
The agency's move "creates a gaping hole in financial regulation," according to the lawsuit by The Independent Community Bankers of America, one of America's largest banking advocacy organizations. It argues the move will "perversely allow entities engaged in highly risky cryptocurrency and digital assets activities to enter the banking system under lightly regulated national charters" which actually preempt many state regulations, including consumer protection laws. But the move would also "place community banks at a severe competitive disadvantage," the lawsuit argues, "by allowing the national trust banks to offer many of the same services as community banks without complying with the same costly banking laws and regulations that apply to the community banks." This competitive advantage could "siphon deposits out of community banks and into deposit alternatives like cryptocurrency," which they describe as "highly volatile, prone to market crashes, cybercrime, and fraud" and lacking protections like deposit insurance.
They also warn that America's Office of the Comptroller of the Currency "has not managed an uninsured bank receivership in nearly one hundred years. But failures of risky uninsured national trust banks could spread instability throughout the nation's financial system, including by spreading contagion risks to other traditional banks like community banks."
CoinDesk reports: [The Independent Community Bankers of America] also played a significant role in pushing back against the Digital Asset Market Clarity Act that failed to advance in the U.S. Senate last month — in part due to the bankers' objections that its stablecoin provisions didn't protect them against direct competition with the deposit accounts that are core to their businesses.
Now, the group is targeting the trust charters crypto firms are pursuing as an entry point into the U.S. banking and payments system. "Congress did not create the national trust charter as a side door into the banking system for crypto firms seeking the credibility of a federal bank charter," ICBA President and CEO Rebeca Romero Rainey said in a statement..
I expect some confused consumers (Score:5, Interesting)
Re: (Score:2)
Piggy BANK
BANK shot
I’ll see myself out.
Re: (Score:2)
Basic explanation (Score:4, Insightful)
Glass-Steagal (Score:2)
Why we desperately need it brought back, investment banks *separate* from savings.