Wall Street Banks Consider Lawsuit to Block Crypto ‘Shadow Banks’

Major U.S. banks led by JPMorgan and Goldman Sachs may sue regulators to block crypto firms from getting federal trust bank licenses.

Some of the biggest names on Wall Street are gearing up for a legal fight.

The Bank Policy Institute (BPI), which represents major U.S. banks including JPMorgan Chase and Goldman Sachs, is reportedly weighing a lawsuit against the Office of the Comptroller of the Currency (OCC).

At stake is a proposed rule change that could let crypto firms operate like banks across all 50 states.

BPI argues the change creates a dangerous loophole. It says crypto companies would gain bank-like powers without shouldering the same regulatory burden.

What the OCC Rule Change Actually Means for Crypto Banking

The core of this dispute traces back to October 2025. That is when companies like Circle and Ripple filed applications with the OCC for national trust bank charters. These charters would give them a federal license to operate nationwide.

Under the proposed change, crypto firms could hold digital assets, move money, and serve customers in every U.S. state.

This is a significant shift.

Before, crypto firms mostly operated under a patchwork of state-level licenses. A federal charter would remove those barriers overnight. It would put firms like Circle and Ripple on far steadier ground when competing for customers.

The OCC has signaled openness to granting these charters. The regulator sees it as a way to bring crypto activity under a formal federal framework.

But traditional banks read it very differently. To them, it is an invitation for less-regulated competitors to undercut the established financial system.

BPI’s concern is not just competitive. The group argues that allowing crypto companies to offer bank-like services without equivalent rules poses risks to the wider financial system. That concern sits at the heart of the potential lawsuit.

JPMorgan and Goldman Sachs Push Back Against Crypto Firms

The BPI does not shy away from legal action.

In 2024, it successfully challenged the Federal Reserve over stress test procedures. That win likely emboldens the group now. Taking on the OCC would follow a similar playbook: argue regulatory overreach and ask a court to intervene.

Traditional banks operate under strict capital requirements, consumer protection laws, and regular audits. BPI says crypto firms seeking trust charters would skip much of that.

The result, according to the group, is an uneven playing field. It frames the issue not as anti-competition, but as a question of systemic safety.

BPI members like JPMorgan and Goldman Sachs have their own crypto ambitions. Still, they draw a clear line at what they see as regulatory shortcuts. Banks spent decades complying with rules built after financial crises. Watching newer firms sidestep those rules does not sit well with them.

According to Bull Theory, which first highlighted this development, the BPI views the OCC rule change as a loophole.

The concern is that crypto companies would gain access to the benefits of a banking license without accepting the full weight of banking regulation.

Read also: 12 European Banks Unite Under Qivalis to Launch Euro Stablecoin in 2026

What Circle and Ripple Stand to Gain From a Federal Trust Charter

For Circle and Ripple, the appeal of a federal trust charter is obvious.

It would allow them to operate across state lines without juggling dozens of separate licenses. That saves time and money. More importantly, it signals legitimacy. A federal license carries weight that state approvals simply do not.

Circle, the issuer of the USDC stablecoin, processes billions of dollars in transactions. Ripple handles cross-border payments for financial institutions globally.

Both firms would benefit from the kind of regulatory clarity that a national charter provides. It would open doors to partnerships with larger financial players.

The broader crypto industry is watching this closely. A successful charter application could set a template for other crypto companies to follow. That possibility is exactly what worries the BPI. Once the door opens, it may be difficult to close.

For now, the BPI has not filed any suit. The group is still weighing its legal options, according to available reports. But the fact that Wall Street’s biggest banks are even considering court action signals how seriously they take this threat.

The outcome of this dispute could reshape the future of crypto banking in the United States.

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