OCC’s Crypto Trust Charter Framework Heads to Federal Court
The Independent Community Bankers of America (ICBA) sued the Office of the Comptroller of the Currency (OCC) on Oct. 2 in the U.S. District Court for the District of Columbia.
Summary:
- ICBA sued the OCC on Oct. 2, challenging its interpretation of federal authority over national trust banks.
- The dispute turns on whether trust banks may conduct substantial non-fiduciary activities, including crypto custody and related services.
- The OCC says its 2026 rule clarified existing authority rather than creating new chartering powers.
- ICBA also wants the court to vacate the conditional national trust bank charter granted to Protego.
The trade group argues that the regulator has stretched the national trust bank charter beyond the authority Congress granted it.
The lawsuit challenges the OCC’s March 2026 final rule and Interpretive Letter No. 1176, which underpin the agency’s position that a national trust bank can conduct certain non-fiduciary activities in addition to traditional fiduciary services. ICBA is also asking the court to vacate the conditional charter granted to digital asset company Protego.
The dispute could affect a regulatory route already being used by crypto companies seeking federal supervision without becoming conventional deposit-taking commercial banks.
Congress Never Defined the Key Term
The legal disagreement begins with a few words in federal banking law.
Section 27(a) of the National Bank Act allows the OCC to charter a national bank whose operations are limited to those of a “trust company and activities related thereto.”
The statute, however, does not define “trust company.” Interpretive Letter 1176 acknowledged that absence and concluded that trust-company activities can include functions permitted to state trust companies even when those functions are not technically fiduciary activities under separate federal rules.
That interpretation is particularly important for crypto.
Digital asset custody, safekeeping and related transaction services do not always fit neatly within conventional fiduciary relationships.
A narrower interpretation of the statute could therefore limit what crypto-focused national trust banks are allowed to do.
ICBA argues for that narrower reading. It maintains that national trust companies should be restricted to fiduciary activities authorized under federal law and incidental functions, rather than being allowed to build businesses substantially around non-fiduciary digital asset services. ICBA.org
The OCC takes the opposite position.
OCC Formalized Its Interpretation in 2026
The agency strengthened its position with a final rule issued in February and published in March.
The amendment replaced references to “fiduciary activities” in the OCC’s chartering regulation with “operations of a trust company and activities related thereto.” It took effect on April 1. OCC.gov
According to the OCC, the change neither expanded nor contracted its chartering authority. The agency said it aligned the regulation with the wording Congress already used in Section 27(a).
The OCC also rejected the idea that national trust banks must be confined exclusively to fiduciary functions. Its rulemaking specifically identified custody as an example of an activity that may form part of trust-company operations without necessarily being fiduciary. Federal Register Public Inspection
That distinction is visible in individual charter decisions.
When approving Coinbase National Trust Company in April, for example, the OCC concluded that digital asset custody could fall within trust-company operations and that certain related transactional and finder services were sufficiently connected to those custody functions.
ICBA is now asking a federal court to determine whether that interpretation goes beyond what the National Bank Act permits.
Why the Charter Matters to Crypto Firms
A national trust bank is not simply another name for a conventional bank.
These institutions can operate under federal OCC supervision while focusing on trust, custody and related activities rather than the traditional combination of taking insured deposits and making commercial loans.
For digital asset businesses, that structure can support operations such as:
- Crypto custody and safekeeping for institutional or other eligible clients.
- Stablecoin-related services, where permitted under the institution’s charter and applicable law.
- Settlement and transactional services connected with custody operations.
- Fiduciary services involving digital and tokenized assets.
- Federally supervised operations instead of relying entirely on separate state regulatory frameworks.
The precise activities remain dependent on each company’s approved business plan and charter conditions. A national trust charter does not provide unrestricted authority to conduct every banking or crypto activity.
That is also why the court fight reaches beyond the terminology used on a charter. It concerns the boundary between activities Congress authorized for national trust companies and activities the OCC can approve as related to them.
The Crypto Charter Pipeline
Rather than repeating individual firms throughout the article, the current landscape is easier to see in one place:
Approved / Conditional
Application Pipeline
The important point is not simply how many crypto companies appear on the list. The OCC has already applied its interpretation in actual licensing decisions, while other firms continue seeking access to the same framework.
That raises the stakes of ICBA’s challenge beyond one prospective applicant.
Community Banks Challenge the Regulatory Gap
ICBA’s case also focuses on differences between national trust banks and insured community banks.
The trade group argues that crypto-focused trust banks can obtain the credibility and advantages of a federal charter without being subject to the complete regulatory framework that applies to insured depository institutions.
Its objections include differences involving Community Reinvestment Act requirements, FDIC insurance, consolidated supervision, and capital and liquidity standards.
ICBA President and CEO Rebeca Romero Rainey characterized the OCC’s approach as a route into the federal banking system that Congress did not authorize.
Those assertions form part of ICBA’s legal and policy argument. They are not findings that the court has made.
One distinction is particularly relevant for customers: an OCC charter does not itself mean that digital assets held by a national trust bank are covered by FDIC deposit insurance. ICBA specifically raised the risk that consumers could associate the federal “bank” designation with protections that do not apply to those assets.
Protego Puts an Existing Charter Directly at Risk
ICBA is seeking more than a declaration about future OCC policy.
Its complaint asks the court to vacate the conditional national trust bank charter issued to Protego Holdings Corp.
ICBA says Protego illustrates the consequences of the OCC’s interpretation because its planned operations include digital asset custody, trading, lending and issuance. The trade group had previously opposed the company and raised concerns about its governance and risk controls.
Protego therefore gives the lawsuit an immediate licensing decision for the court to examine alongside the broader challenge to the rule and Interpretive Letter 1176.
The outcome does not automatically determine the status of every other national trust bank. Any effect on other approved or pending institutions would depend on what the court ultimately finds unlawful and the scope of the remedy it orders.
The Court Will Test the OCC’s Reading of Federal Law
The two sides have now reduced a broader fight over crypto banking access to statutory interpretation.
The OCC maintains that Congress authorized national banks limited to the operations of a trust company “and activities related thereto,” and that custody and certain other non-fiduciary functions can fall within that perimeter. Its 2026 rule expressly says charter applications will still be evaluated individually.
ICBA argues that the agency has interpreted those words too broadly and created a lightly regulated route for businesses Congress did not intend to place inside the national banking system.
The next stage will shift to the District Court in Washington, where the OCC will have to defend the statutory basis for the rule and Interpretive Letter 1176. The scope of any eventual ruling will determine whether the case remains centered on Protego or reaches more broadly into the federal charter framework being used by digital asset companies.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Alexander Stefanov
Reporter at CoinsPress
Alex is Editor-in-Chief of Coinspress and co-founder of Millennial Media Group, with nearly a decade of experience covering financial markets - crypto first, then everything else. It started in 2016 with Bitcoin. Like most people at the time, he didn't fully understand it - so he kept digging. Blockchain, tokenomics, the projects, the cycles. That curiosity never stopped, and eventually pulled him into traditional markets too: equities, commodities, macro. Not because he left crypto behind, but because you can't properly understand one without the other. What drives him is straightforward: he wants to know why something is happening, not just that it's happening. Most market coverage stops at the headline - price up, price down, here's a chart. Alex finds that kind of reporting actively unhelpful. If you walk away from an article without understanding the mechanism behind the move, what did you actually learn? He holds a degree in Tourism from New Bulgarian University - not the most obvious path into financial markets, but markets have a way of pulling in people who are simply too curious to stay out. He has authored over 200 in-depth analyses and more than 10,000 articles across crypto and traditional finance. He still thinks every day in markets teaches him something new. That's probably why he hasn't stopped.
