WASHINGTON, D.C. / CryptoWire.AI / – U.S. banking regulators are opening the door to crypto banks that enjoy bank-like benefits without matching safeguards, according to Washington-based advocacy group Better Markets. In an October 27 analysis, the group said actions by the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corporation could put deposits and lending at risk. It called on regulators to revisit their approach.
The report came days after the OCC finalised its rule for stablecoin issuers on October 21. The rule implements the GENIUS Act, the federal stablecoin law, and becomes effective on January 18, 2027. Treasury Secretary Scott Bessent compared the act to the National Currency Act of 1863 on the day the rule was released. Better Markets, by contrast, said the framework fails to protect savers and the banking system.
Under the final rule, stablecoins must be fully backed by segregated reserves. The OCC lowered the required daily liquidity floor to 5% of reserves from a proposed 10%. Issuers face a $5 million minimum capital requirement and must cover 12 months of operating costs. They must notify the OCC within 24 hours if redemption requests exceed 10% of a token’s outstanding value. The rule bans issuers from paying yield directly, but the OCC will review stablecoin yield arrangements with third parties on a case-by-case basis.
Charters, payment accounts and deposit insurance
Phillip Basil, who wrote the analysis, said the OCC has widened its national trust charters beyond fiduciary activities. That change, he argued, lets crypto firms carry out activities close to those of traditional banks. Trust charters are the only federal charters available to firms that do not take deposits. The OCC has granted conditional trust charters to crypto firms including Ripple, BitGo, Paxos and Fidelity Digital Assets.
Better Markets also took aim at a Federal Reserve proposal for special accounts that would give eligible firms direct access to Fed payment services. It said crypto banks could reach Fed lending indirectly through deposits held at traditional banks. On deposit insurance, the group said the FDIC has approved coverage for a bank set up to serve crypto companies. It warned that this could leave taxpayers exposed in a crisis.
Debate over the impact on bank lending
The group compared standards for traditional banks with those for stablecoin issuers. Banks must hold minimum capital of 4.5% of risk-weighted assets plus a 2.5% buffer, and larger banks must cover 30 days of stressed outflows. Stablecoin issuers set their capital levels through self-assessment, subject to supervisory review, Better Markets said. Their reserves need only match the value of tokens in circulation. Regular supervisory examinations for issuers are still to be defined, the group added.
The group pointed to a 2025 Kansas City Fed estimate that stablecoin growth to $900 billion could reduce bank lending by $325 billion. It said the impact would be greater if stablecoins reach $2 trillion. Other research has found smaller effects. A White House study in April estimated that banning stablecoin yield would lift bank lending by only $2.1 billion. The American Bankers Association has also criticised parts of the final rule.