American banking industry considers filing a lawsuit to protest OCC's relaxed crypto licensing policies

According to The Guardian, the Banking Policy Institute (BPI), representing 40 major lending institutions such as JPMorgan Chase, Goldman Sachs, and Citigroup, is considering suing the Office of the Comptroller of the Currency (OCC) to prevent it from issuing new licenses to cryptocurrency and fintech companies.

The controversy stems from the OCC's reinterpretation of federal licensing rules under the leadership of crypto executives appointed by the President, which lowered the barriers for crypto and fintech companies to obtain national bank trust licenses, allowing them to operate across all 50 states.

The banking industry responded strongly, arguing that these companies entering the market without the same rigorous regulation and risk controls as traditional banks could pose systemic risks to the financial sector and undermine the credibility of national bank licenses.

As early as October last year, BPI issued a warning that allowing companies to offer bank-like products under looser regulatory standards not only blurs the legal boundaries of "banks" but also exacerbates risks within the financial system.

Notably, World Liberty Financial, operated by the Trump family, applied for a related license as early as January this year, further fueling public doubts about the fairness of OCC's policy reforms.

BPI is currently weighing legal options, and given that the organization successfully sued the Federal Reserve and pushed for rule changes in 2024, there is speculation that it may resort to legal action again this time.

Meanwhile, banking regulators across the U.S. and the Community Bankers Association have also voiced criticism, claiming that OCC's plans will weaken consumer protections, disrupt competition, and threaten financial stability.

Despite ongoing market speculation, BPI has not yet made a final decision on whether to pursue formal litigation, and OCC has refused to comment.

Overall, whether the lawsuit proceeds or not, it has already created a rift between the two sides. The crypto industry, full of ambition, is eager to penetrate the traditional financial system; traditional banks are fiercely guarding their turf to maintain the existing financial order;

Meanwhile, OCC regulators find themselves caught in the middle, under immense pressure from both sides. How to craft policies that promote industry growth while ensuring financial stability remains a major challenge for regulators.