The Independent Community Bankers of America (ICBA) has issued a letter to the Office of the Comptroller of the Currency (OCC), formally opposing Ripple’s application for a national bank charter.
Reasons for ICBA's Opposition
In the letter, ICBA, the primary trade group for small U.S. banks, argued that RLUSD effectively mimics traditional bank deposits. They warned this could drain funds from community banks and destabilize the traditional banking system.
ICBA stated, “The OCC should not allow stablecoin issuers to use the national trust bank charter to benefit from full-service bank powers without full-service bank requirements.”
They noted that stablecoins like RLUSD, which function similarly to deposits, demand stricter oversight and stronger consumer protections than those traditionally applied to trust banks.
Compliance Issues with Ripple
ICBA also cited Ripple’s prior legal and regulatory failures to comply with federal laws. It referred to recent controversies and legal actions involving Ripple Labs and its subsidiary XRP II for failing to implement BSA/AML/CFT compliance.
Additionally, ICBA raised the issue of the SEC’s lawsuit against Ripple, stating that “Ripple also has difficulty complying with securities laws and regulations.”
The history of Ripple Labs in violating securities laws raised concerns, compelling ICBA to oppose Ripple’s application.
Call for Stricter Oversight
ICBA criticized OCC for altering eligibility criteria for national trust bank charters, which eliminated long-standing requirements and lacks statutory backing. Given these factors, the bank association urged OCC to apply stronger consumer and risk oversight standards to crypto-focused trust bank applicants like Ripple.
Moreover, they called for enhanced regulatory scrutiny and robust enforcement to deter abuses that undermine public trust in the banking system.
ICBA's stance reflects deep concerns about stablecoins and their impact on the traditional banking system. The association strongly recommends tighter control measures in light of the increasing risks associated with cryptocurrency initiatives.
