Top Banks Lobby Against Ripple, Circle Trust Approval — Fear of XRP Disruption?

• U.S. banks are asking regulators not to approve national banking charters quickly for crypto companies.
• Some argue that Circle and Ripple don’t meet fiduciary requirements and should not be given such privileges.

The coalition is made up of the major U.S. trade associations in banking, such as Consumer Bankers Association and Independent Community Bankers of America. Other members include American Bankers Association (ABA), America’s Credit Unions (ACU), National Bankers Association. sent a joint letter To the Office of the Comptroller of the Currency, asking that it temporarily suspend new banking licence applications by several crypto-related companies.

This letter urges the regulators to put a halt on applications for national trust banks from several crypto-focused companies, such as Ripple National Trust Bank and National Digital Trust Co.

The move is made just a week after Ripple submitted an application to the Federal Reserve for a license as a national bank. This is done to monitor its RLUSD operations, and gain access to Federal Reserve payment system. Circle, which is the creator of USDC (the second largest stablecoin after USDT) filed a similar request on June 30. as reported by Crypto News Flash.

The traditional banks fear that a charter of this kind could have a disruptive effect on the banking sector, cause money laundering to increase, and give unfair advantages to crypto firms.

Cryptofirms and Trust Banks

They argue that historically national trust banks focused primarily on providing fiduciary service, like managing estates or trusts. But many crypto companies, for example those who are seeking new federal charters mainly offer stablecoin and digital asset reserve management. These services do not fall under the federal definition of fiduciary. According to them, approving these charters will exploit a loophole in the law and fundamentally change what a trust institution is.

These groups referred to the Interpretive Letter No. 1179 that was now revoked, which permitted the OCC’s definition of fiduciary service on a per-case basis. This followed Letter No. 1176 which had opened up the possibility for crypto-custody through trust charters, without the public being consulted.

Associations also complained about the lack of transparency with current applications, stating that they were vague in their public filings and had too few comment periods to provide meaningful oversight. Then they stated: “Accordingly, the Associations respectfully request that the OCC release to the public a more complete description of the Applicants’ business plans, with appropriate redactions only with respect to truly confidential information, and an extension of the comment periods that provide ample time to scrutinize such information.”

These people are concerned that issuing these charters will set a dangerous precedent by allowing for dozens of fiduciary crypto firms To enter the regulated financial system without adequate oversight. This could undermine decades of financial regulations and threaten systemic stability.

The implications for XRP

A new development emerged just as the XRP Community thought that the legal fight with the SEC, which had lasted for years, was behind them. Ripple’s application for a charter as a national banking institution is gaining new attention. But this time it’s not bad.

The move already has given XRP bullish momentum, as the price of the token has increased by 21% during the past 7 days, and by 2.85% within the last 24 hour period, currently trading at $3.61. The trading volume has also increased 39% to $9.35 billion. A national charter could be approved, as can an international charter. XRP ETF XRP would certainly rise to $5.

It would mark the beginning of crypto-native companies gaining access to banking privileges at federal level. The charter could be delayed or denied, which would give traditional banks a victory, and slow crypto’s adoption into mainstream finance.

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