Community banks warn Kraken OCC charter could drain deposits

Payward Inc., the parent company of crypto exchange Kraken, has applied for a national trust bank charter with the Office of the Comptroller of the Currency. The Independent Community Bankers of America asked the OCC to pause consideration of the filing, rescind Interpretive Letter No. 1176 and begin a formal rulemaking to clarify what national trust charters permit.

ICBA President and CEO Rebeca Romero Rainey characterized the combination of payment stablecoins, Federal Reserve master account access and national trust charters as ‘interconnected risks’ that could pull deposits from community institutions and reduce lending to consumers, small businesses and farmers. The association published an issue brief titled ‘Stablecoins, Master Accounts and National Trust Charters: Community Bankers Urge a Pause on Policies for Unaccountable Entities.’

The Payward filing followed Kraken’s access to a Federal Reserve master account and comes while Congress is debating legislation on stablecoins and digital assets. The ICBA argues Interpretive Letter No. 1176 has enabled nonbank fintechs to seek traditional trust charters while engaging in activities the charter was not intended to cover.

American Bankers Association CEO Rob Nichols wrote to bank CEOs on May 10, 2026, urging them to contact senators ahead of a planned Senate Banking Committee vote on the CLARITY Act, a bill that would shape digital asset market structure and access to federal banking infrastructure. Banking groups, including the Bank Policy Institute, have pressed for strict limits on yield-like payments tied to payment stablecoins, saying those rewards could accelerate deposit outflows and reduce the funds community banks use to make loans.

Supporters of stablecoin access point out that tokens such as USDC and USDT are often backed by short-term Treasuries or cash equivalents and have recently provided holders with roughly 4% to 5% in some rate environments, higher than many traditional deposit accounts. Some economists and crypto advocates say the current scale of stablecoins means the effect on bank deposits is modest.

Patrick Witt, executive director of the President’s Council of Advisors for Digital Assets, posted on X that he invited Nichols and other bank trade executives to meetings in February to address stablecoin yield issues and that they declined to attend. Witt added that he would not want to defend their position in public.

The OCC will review Kraken’s charter application as Congress continues to negotiate the CLARITY Act and policymakers consider the allowable activities for firms that hold master accounts or seek bank-like charters. The ICBA has requested the regulator pause action and start formal rulemaking on the scope of national trust charters.