Banks Say No to Ripple, but a Rare Fed Clause Could Force a Yes

• Ripple’s bid for a US bank charter is facing a major pushback from a coalition of banking associations
• However, Fed documents contain an “emergency clause” that could allow regulators to fast-track an approval
• This sets up a high-stakes battle between the banking lobby’s protest and a potential regulatory override.

Ripple’s quest for a national trust charter reveals intriguing details in Federal Reserve documents. Namely, under the section 12 CFR § 262.3, it’s stated that the Fed must publicize the application and generally has a 90-day review window for filings.

However, the more interesting part is the fact that the Fed has the authority to bypass standard notification periods if it deems a proposal essential for averting a crisis or is required, during an emergency.

Analyses suggest that if the Fed sees Ripple’s charter as systemically important, it could expedite approvals outside the typical 90-day window.

Ripple Labs filed for a national trust bank charter with the US OCC (Office of the Comptroller of the Currency) on July 2, aiming to handle its RLUSD stablecoin reserves federally and access a Fed master account.

The application includes OCC trust bank status and Fed master account access, which has the potential to enable Ripple to hold US dollar reserves directly with the Fed and settle payments 24/7.

Outside of Ripple, institutions like Circle and BitGo are also pursuing similar federal charters.

Pushback from the banking sector

Ripple’s ambitious plan has been met with stiff resistance from the traditional banking sector. A coalition of traditional banking associations wrote to the OCC requesting a pause on all new crypto trust-bank charters, including Ripple’s. 

The coalition includes the American Bankers Association, Consumer Bankers Association, Independent Community Bankers of America, National Bankers Association, and America’s Credit Unions.

They stated that crypto firms don’t meet existing definitions of trust bank activities (like estate and fiduciary management) and could exploit regulatory loopholes. Additionally, they warn that this approach might weaken regulatory standards, advocating strongly for complete transparency and public involvement before any approvals are granted.

Either way, this may be big news for crypto if the approval indeed does happen. If approved, Ripple (and possibly others) could gain full access to the Fed payment infrastructure, increasing credibility and efficiency.

Plus, a green light would mark a historic moment in the integration of crypto into mainstream finance, building on stablecoin clarity from the GENIUS Act.

OCC decisions aren’t expected until late 2025 or early 2026, coinciding with the EGRPRA (Economic Growth and Regulatory Paperwork Reduction Act) review, which happens only once in 10 years. This regulatory review grants major financial authorities the ability to revise banking laws without requiring direct action from Congress.