Let the newcomers in, and examine them
The community banks' lawsuit is framed as a defence of the charter. Its practical effect would be a federal regulator keeping new competitors out of payments.
Every incumbent industry eventually discovers that the cheapest place to compete is a courtroom. The Independent Community Bankers of America sued the Office of the Comptroller of the Currency on 2 October, asking a judge to throw out the rule under which crypto companies have been winning national trust charters. The complaint is written in the language of safety. Its practical effect would be to keep a set of new payment firms out of the federal system.
Consider the alternative. Stablecoin issuers and crypto custodians do not vanish if they cannot get a federal charter. They operate under state licences, or from offshore. A national trust bank answers to OCC examiners who can walk in and count what it holds. That is more supervision, not less.
Nor are the applicants asking to become banks by the back door. Rain's proposed trust bank would take no deposits, make no commercial loans and offer no consumer accounts, and its release says the reserves behind its stablecoins would not be pledged, lent or reused. A firm that does not lend cannot run the maturity mismatch that sinks banks. Holding reserves in full and in custody is the most conservative kind of banking there is.
The complaint about Community Reinvestment Act duties proves too much. Those obligations attach to insured banks because they gather deposits backed by the FDIC. A trust bank that takes no deposits gets no deposit insurance, and should not carry the duties that come with it. The comptroller, Jonathan Gould, put the principle plainly in December: "New entrants into the federal banking sector are good for consumers, the banking industry and the economy."
If the OCC charters a firm that turns out to be a disguised bank, the remedy is to examine it and, if necessary, take the charter away. Stopping every approval while a trade group litigates hands a quiet win to the institutions that already hold charters. Congress passed the GENIUS Act to bring dollar stablecoins under American supervision. The regulator should be allowed to finish the job.