Community Banks Have Sued to Void the Rule Behind Crypto Firms' National Trust Charters

The Independent Community Bankers of America has asked a federal court to undo the legal basis on which crypto firms have been obtaining national trust bank charters. The association filed its complaint on October 2 in the US District Court for the District of Columbia against the Office of the Comptroller of the Currency and Comptroller Jonathan V. Gould, as case number 1:26-cv-03441, and announced it publicly on October 5.

The dispute turns on a question that sounds semantic and is not: whether a national bank chartered to run "the operations of a trust company" must act as a fiduciary.

What the OCC changed in March

On March 2, 2026 the OCC published a final rule titled National Bank Chartering at 91 Fed. Reg. 9977, effective April 1. The rule amended 12 CFR 5.20, specifically sections 5.20(e)(1)(i) and 5.20(l)(1), replacing references to "fiduciary activities" with the statutory phrase "the operations of a trust company and activities related thereto".

The agency grounded the change in 12 U.S.C. 27(a), a 1978 provision allowing it to charter banks limited to those operations. In the rule the OCC rejected comments arguing that a trust charter requires exclusively fiduciary business. It said the 1979 opinion in National State Bank of Elizabeth v. Smith, on which commenters relied, contained dicta and was inconsistent in distinguishing trust operations from fiduciary ones, and that "trust" and "fiduciary" are different things in the federal banking statutes.

The practical effect is that an applicant can hold a national trust charter while conducting mainly non-fiduciary activity — custody, trading, lending and asset administration performed as an agent rather than as a trustee. The OCC supervises roughly 60 national trust banks, most of them uninsured, and granted five conditional approvals for new national trust bank charters in December 2025.

What the complaint asks for

ICBA pleads three counts under the National Bank Act and the Administrative Procedure Act.

1. That the March 2026 final rule exceeds the OCC's statutory authority and violates the APA, and should be vacated in its entirety.
2. That Interpretive Letter No. 1176, issued January 11, 2021, exceeds statutory authority and was adopted without the required notice and comment, and should likewise be vacated.
3. That the OCC's conditional approval of Protego Holdings Corporation's trust bank charter — Approval No. 1259, dated February 4, 2021 — was ultra vires and arbitrary and capricious, and should be vacated.

The association also seeks injunctions barring the OCC from relying on the rule or the letter in approving charters, plus attorney fees and costs.

The regulatory asymmetry at the centre of the argument

A national trust bank is typically uninsured and does not take deposits. That is the point of the charter, and it is also the reason the obligations attached to it are lighter. ICBA's contention is that a firm holding one gains the standing and preemption benefits of a federal bank charter without the duties that come with insured deposit-taking.

Congress did not create the national trust charter as a side door into the banking system for crypto firms seeking the credibility of a federal bank charter without the Community Reinvestment Act obligations, consolidated supervision, capital and liquidity standards, and FDIC insurance that apply to insured depository institutions.

The complaint states that at least 13 crypto firms sit among 21 national trust bank charters the OCC has approved or conditionally approved, and that those entities compete with community banks while carrying different obligations.

Why Protego is named

Protego Holdings Corporation appears in the complaint as the concrete example. According to the filing, Protego proposed custody, trading, lending and asset administration services for digital assets, largely in non-fiduciary capacities. The complaint also recounts that an earlier conditional approval lapsed in 2023 after the company failed to meet capital and liquidity requirements, that its investor base was concentrated in other crypto firms that suffered during market downturns, and that litigation followed.