ICBA to OCC: Reject Ripple’s Bank Application Over Stablecoin and Compliance Issues

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. ICBA pointed out several systemic risks related to Ripple’s proposed stablecoin RLUSD, including its non-compliance with law and ordinance.

Why is the ICBA Opposing Ripple’s National Bank Application?

On Monday, ICBA, a primary trade group for small US banks, wrote a letter to OCC arguing that RLUSD effectively mimics the function of traditional bank deposits. They warn that 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.”

“Stablecoins like RLUSD, which function similarly to deposits by enabling transfers, purchases, and dollar redemption, differ sharply from the custodial and fiduciary roles trust banks were designed for. This demands stricter oversight and stronger consumer protections than those traditionally applied to trust banks,” it added. 

Ripple’s History of Non-Compliance Becomes an Issue

The ICBA letter also cites Ripple’s prior legal and regulatory inadequacies in compliance with federal law. It mentioned the recent controversies and legal actions involving Ripple Labs and its subsidiary, XRP II, for failing to implement BSA/AML/CFT compliance. 

Moreover, it also raised the issue of the SEC’s lawsuit against Ripple, citing that “Ripple also has difficulty complying with securities laws and regulations.”  

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Ripple Lab’s history of deliberately and recklessly violating securities laws, along with the ongoing nature of this misconduct, compelled the ICBA to oppose Ripple’s application. The bank association said that no company that pushes the boundaries of securities law, like Ripple Labs, should be permitted to use the national trust bank charter. 

ICBA Demands Stricter Oversight

ICBA also criticized OCC for altering eligibility criteria for national trust bank charters, which eliminated the long-standing requirement and lacks statutory backing. Given these factors, the bank association urged the OCC to apply much stronger consumer and risk oversight standards to crypto-focused trust bank applicants like Ripple. 

Additionally, it also called on the OCC to implement enhanced regulatory scrutiny and robust enforcement to deter abuses that undermine public trust in the banking system. 

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