TLDR
- The ABA opposes Ripple and Circle’s bank licenses, arguing they don’t meet fiduciary service requirements under U.S. law.
- Ripple and Circle’s push for bank licenses aims to integrate stablecoins and payments more deeply into the U.S. financial system.
- The ABA warns of risks from granting banking licenses to non-fiduciary crypto firms, fearing potential regulatory loopholes.
- Crypto experts argue blocking Ripple and Circle stifles innovation and competition in the financial services sector.
John Deaton has strongly criticized the American Bankers Association (ABA) for urging the U.S. Office of the Comptroller of the Currency (OCC) to block bank licenses for companies like Ripple and Circle. This plea from the ABA and other financial groups has raised concerns about stifling innovation in the financial sector while protecting traditional banking practices.
Ripple and Circle Seek Banking Licenses Amid Growing Opposition
Deaton has called on policymakers to reject the obstructionist efforts from the American Bankers Association (ABA) and other financial groups, including America’s Credit Unions and the National Bankers Association.
These organizations, as a result, have pushed the Office of the Comptroller of the Currency (OCC) to delay crypto trust charter approvals, arguing that companies like Ripple and Circle should not be granted federal trust charters due to their lack of traditional fiduciary services.
Consequently, their concern is that these firms could bypass regulatory obligations that apply to conventional banks.
Ripple and Circle are seeking federal banking licenses to integrate their services into the mainstream financial system. Ripple aims to expand its payment services and stablecoin offerings, while Circle wants to operate as a national trust bank to better regulate its USDC stablecoin reserves.
DEAR @SecScottBessent, @DavidSacks @davidsacks47 @BoHines:
Please tell @ewarren’s friends at the American Bankers Association to F off. https://t.co/7yPEziQ3SE
— John E Deaton (@JohnEDeaton1) July 22, 2025
These moves are seen as crucial steps toward bridging the gap between digital assets and traditional finance.
Experts like Deaton and Vincent Van Code argue that the resistance is anti-competitive, hindering innovation and progress. They highlight how digital-first companies like Ripple and Circle are modernizing finance, reducing overhead, and benefiting consumers through more efficient systems.
Legal Concerns and Risks Raised by Banking Groups
At the heart of the ABA’s argument is the claim that national trust bank charters should be reserved for firms offering fiduciary services, as mandated under U.S. law. According to the ABA, Ripple and Circle’s focus on digital asset custody and payments does not align with these requirements.
The financial groups have raised concerns about the potential risks that could arise from allowing such companies to receive banking licenses. They argue that the applications could set a dangerous precedent, leading to a flood of digital asset firms seeking similar licenses without meeting the required regulatory standards.
The ABA specifically cited the now-rescinded Interpretive Letter 1179, which had allowed more flexibility in defining fiduciary activity for digital asset firms.
The concern is that this flexibility could weaken existing safeguards and regulatory standards in the financial system. As a result, the groups are calling for stricter criteria for granting federal trust charters to ensure systemic stability.
Experts Criticize ABA’s Efforts to Block Crypto Banking Integration
Industry experts have voiced strong opinions in response to the ABA’s position, with many criticizing it as anti-competitive. Crypto lawyer John Deaton has publicly condemned the ABA’s actions, describing them as obstructionist and harmful to innovation. He has urged policymakers to disregard the ABA’s requests and allow Ripple and Circle to move forward with their applications.
Vincent Van Code has echoed these sentiments. He argued that digital-first companies like Ripple and Circle are modernizing the finance sector by cutting down on overhead costs and improving efficiency.
According to Van Code, such firms play a key role in reshaping finance and should be given the opportunity to grow within the regulatory framework.
These critics, as a result, contend that blocking Ripple and Circle from obtaining banking licenses would hinder progress in the financial sector, especially as they are attempting to bring new, more efficient models to the market.
For Deaton and others, the battle over banking licenses is not just about regulatory oversight but also about which players will shape the future of the financial industry.
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