US Senator claims "Ripple's bank charter is illegal"...Is XRP facing a regulatory bomb?

▲ XRP, Cryptocurrency Regulation/AI Generated Image

While Ripple's national trust bank charter was drawing attention as a key positive for XRP's integration into the institutional framework, U.S. Senator Elizabeth Warren questioned the legality of the charter itself, bringing regulatory risks back to the forefront.

According to 24/7 Wall St. on May 27 (local time), Warren stated in a letter sent to the U.S. Office of the Comptroller of the Currency (OCC) on May 18 that the national trust bank charters granted to nine cryptocurrency firms, including Ripple, violate the U.S. National Bank Act. Warren pointed out that these charters could pave the way for crypto firms to offer bank-like services, potentially circumventing existing banking regulations.

24/7 Wall St. reported that Ripple's national trust bank charter had been previously considered a factor that could elevate XRP into the regulated financial market. However, with Warren's challenge, this charter has transformed from a simple growth signal into a direct clash between politicians and regulatory authorities. Warren targeted not only Ripple but also the chartering processes of other cryptocurrency firms such as Coinbase and Paxos.

The core issue is the extent of the U.S. Office of the Comptroller of the Currency's legal authority to grant national trust bank charters to cryptocurrency firms. Warren suggested that the final rule confirmed by the OCC in March might have excessively broadened the scope of activities permitted for national trust companies. She demanded that the regulatory body submit relevant applications and internal communication materials by June 1.

From Ripple's perspective, this controversy burdens XRP's narrative of expanding into institutional finance. The national trust bank charter was interpreted as an opportunity for Ripple to strengthen its identity as a regulated financial institution beyond a mere payment company, but Warren's challenge leads to pressure for that path to undergo legal scrutiny once again. 24/7 Wall St. reported that this controversy has turned Ripple's bank charter issue into a new variable that XRP investors must closely watch.

Voices refuting Warren's claims also emerged from the cryptocurrency industry. The Digital Chamber conveyed to the OCC that companies like Coinbase and Ripple are not the same as traditional banks that receive FDIC-insured deposits, and that stablecoin issuance and custody services should not be treated identically to general banking. 24/7 Wall St. reported that this issue is expanding into a debate that shakes the entire federal chartering system for cryptocurrency firms, beyond just Ripple's charter.

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