ABA Urges OCC to Provide Stronger Safeguards, Clearer Rules for Charter Applicants

WASHINGTON — In a new comment letter submitted today, the American Bankers Association urged the Office of the Comptroller of the Currency to uphold strong safety and soundness standards, increase transparency in the chartering process, and move cautiously as new regulatory frameworks develop. The letter, submitted in response to the OCC’s National Bank Chartering Notice of Proposed Rulemaking, also called for updated naming rules to ensure charter applicants do not misrepresent the services they intend to offer.

ABA’s letter emphasizes that the OCC must “ensure that robust, broadly applicable safety and soundness standards are well understood and upheld during this period of rapid innovation” and encouraged the agency to increase transparency throughout the chartering process. The association noted that the responsibilities of many recent and likely future charter applicants “are not readily identifiable today because Congress and federal and state regulators have not yet adequately defined regulatory frameworks applicable to entities engaged in stablecoin and other digital asset activities.”

ABA asserted that the proposed amendment to 12 CFR 5.20 is material and merits continued deliberation given its “likely outsized role in the development and implementation of a number of other agencies’ pending rulemakings.” The association also urged the OCC to take a more deliberate approach as regulators work to define rules for emerging financial activities, calling on the agency “to be patient, not measure its application decisioning progress against traditional timelines, and allow each charter applicant’s regulatory responsibilities to come fully into view before moving a charter application forward.”

The letter also highlights the need for strong safeguards around resolution planning. ABA “strongly encourages OCC to ensure that its receivership capacities and related powers and practices are adequate to address any insolvency risks raised by any existing or new OCC charter applicant,” particularly those experimenting with new business lines and unfamiliar operational risks.

As part of its recommendations, ABA stressed the importance of name accuracy for chartered entities to avoid misleading consumers. The association encouraged “OCC to amend its regulations to prohibit any charter applicant – other than a subsidiary of a bank or bank holding company – that limits its activities to either ‘fiduciary activities’ or ‘the operations of a trust company and activities related thereto’ from including the word ‘bank’ in its name.” ABA noted that this step would help ensure entities “not have a title that misrepresents the nature of the institution or the services it offers.”

Read the full letter.

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About the American Bankers Association

The American Bankers Association is the voice of the nation’s $25.1 trillion banking industry, which is composed of small, regional and large banks that together employ over 2 million people, safeguard $19.7 trillion in deposits and extend $13.2 trillion in loans.

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