- Sen. Elizabeth Warren has joined the same banks she has been fighting for years to wage war against Ripple and other crypto banking charters.
- Crypto is fighting back, with the Digital Chamber sending a letter defending the charters, while BitGo blasted Warren in an open letter.
Senator Elizabeth Warren has waged yet another war against crypto, and this time, she’s targeting Ripple and other crypto firms that have obtained national trust charters. However, the crypto industry is standing its ground and fighting back.
It all started when the Massachusetts lawmaker sent a letter to the Office of the Comptroller of the Currency (OCC), raising concerns over the issuance of the charters. As we reported, Ripple led a group of crypto firms that received the charters, including BitGo, Paxos, Fidelity Digital Assets, and Circle.
She argues that the crypto firms are seeking lighter licenses to offer banking services, which these charters do not allow. She stated:
“These companies are effectively crypto banks that want to evade the fundamental safeguards and obligations that come with being a bank.”
A trust charter allows a company to custody and manage clients’ assets. To expand into deposit-taking and lending, one must obtain a banking charter, and these are much harder to acquire and come with strict requirements.
Warren argues that crypto firms are offering banking services under trust charters. She claims that their applications had language that suggested they would offer payments, lending and stablecoin issuance, which are closely related to deposit-taking.
The Senator demanded that the OCC present a response to her letter, explaining why it issued the charters, and whether the Trump family influenced its decision.
Crypto Fights Back Against Sen. Warren
The crypto industry is fighting back against the Senator. The latest to speak up is Digital Chamber, one of the largest industry lobby groups. In a letter to the OCC yesterday, it accused Warren of overstepping by claiming that the regulator had engaged in ‘apparent violations.’
The OCC reserves the right and authority to make these decisions, and it engaged in rigorous scrutiny of these companies’ ability to safeguard assets and serve clients. It has also issued strict limits on what activities they can engage in, the Chamber argued.
It stated:
“The claim that these firms seek to “evade” regulations (by seeking bank charters which subject them to drastically increased regulatory scrutiny) or pose risks to the safety and soundness of the banking system is contradicted by their own conduct. These companies voluntarily sought federal oversight.”
Cody Carbone, the Chamber’s CEO, added that if Warren believes the OCC crossed a line, she should openly cite this line and take legal action. Using a ‘this seems wrong’ argument is disappointing, especially from a lawmaker with so much power in the Senate Banking Committee, he added.
Mike Belshe, the CEO of BitGo, which itself received a trust charter, also fired back at Warren. In a lengthy letter to the Senator, Belshe said that BitGo does not engage in any activity that would require a banking charter, and that it adheres to all the rules set by the OCC.
He added that it’s ironic of Warren to fight against the very regulations that would protect investors, stating:
“Here is the central irony I would like to leave you with. Almost every crypto failure that caused real consumer harm — FTX, Celsius, Voyager, BlockFi, Genesis — shares a single defining feature: the absence of fiduciary custody…A national trust charter is the natural solution to exactly this problem.”
