TL;DR: The Independent Community Bankers of America sued the OCC on October 2 over its crypto trust bank charters, saying the agency exceeded its authority. Meanwhile, the OCC’s October 14 debanking report barely mentions crypto. Bank of America’s $1.2 billion AML penalty energized crypto advocates who claim banks were the real compliance problem. Binance faces a DoJ probe into whether Iran-linked activity breached its 2023 settlement.
Key Takeaways:
- America’s community banks sued the feds over crypto trust charters: the ICBA filed suit against the OCC and Comptroller Jonathan Gould on October 2.
- The OCC has approved or conditionally approved 21 trust banks since 2025, 13 of them crypto-related, with Block, Rain, and Modern Treasury applications now pending.
- The OCC says crypto firms were debanked, but its October 14 report gives digital assets only a passing reference and focuses mainly on coal, oil and gas, firearms, prison, and tobacco companies.
- Bank of America told crypto’s critics “hold my beer” in effect: its $1.2 billion AML penalty, including a record $750 million OCC fine and over $5 billion in unreported suspicious activity, gave crypto advocates a rebuttal to years of money laundering criticism.
- U.S. authorities are checking whether Binance violated its 2023 $4.3 billion settlement, and DoJ criminal division head Tysen Duva confirmed an ongoing investigation tied to sanctioned Iranian financier Babak Zanjani’s $850 million in account activity.
On October 2, the Independent Community Bankers of America (ICBA) announced that it was suing the Treasury Department’s Office of the Comptroller of the Currency (OCC) and OCC chief Jonathan Gould for “authorizing novel entities primarily dealing in cryptocurrencies to enter the banking system without being subject to the same rigorous regulatory framework or safeguards as community banks.”
Late last year, the OCC began approving applications filed by digital asset operators seeking national trust bank charters. Many of these operators want the capacity to custody stablecoin reserve assets themselves and eliminate third-party middlemen. Applicants included World Liberty Financial (WLF), the Trump-linked issuer of the USD1 stablecoin. To date, the OCC has approved or conditionally approved 21 new trust banks, 13 of which are crypto-related, since Trump took office in 2025.
This spring, the ICBA warned of the “growing convergence of crypto firms seeking greater access to the federal banking system … without comparable regulation as banks.” The OCC took no notice, and Gould continued to stamp ‘approved’ on multiple applications, including one to Catena Labs for “a national trust bank built for AI agents.”
The ICBA’s civil complaint notes that the OCC issued a new rule in March asserting “sweeping new powers to charter national trust banks that are not authorized by the National Bank Act.” The OCC “far exceeded its limited statutory authority” by approving the crypto banks, in the process creating “a gaping hole in financial regulation.”
The ICBA notes that a national bank charter “pre-empts many state regulations, including consumer protection laws.” This “perversely” allows crypto operators “to enter the banking system under lightly regulated national charters rather than the more rigorously regulated traditional bank charter.”
More to the point, the ICBA says this puts its member banks “at a severe competitive disadvantage” by allowing crypto banks to offer many of the same services without being subject to the considerable costs of adhering to traditional banking regulations.
The ICBA’s suit asks the U.S. District Court for the District of Columbia to declare the OCC’s new powers unlawful, vacate the March rule change, and rescind the bank charter issued to crypto operator Protego Holdings, which received its OCC conditional approval in February.
It’s worth noting that the ICBA objected to Protego’s OCC application in June 2025, but the OCC was unmoved. The ICBA’s opposition also hasn’t stemmed the tide of would-be crypto banking applicants, including stablecoin/payment infrastructure firms Rain and Modern Treasury, both of which filed their applications this month.
In September, the OCC received an application from Block (NASDAQ: XYZ), the payment processor established by Jack Dorsey, for a proposed bank called Builders Bank & Trust. On October 2, the ICBA sent the OCC a letter objecting to Block’s application based on the ICBA’s view that the application suggests Builders wants to go beyond simply custodying assets, instead looking to “perform additional transaction, transfer, and settlement functions” beyond the legal scope of a national trust bank.
The ICBA also objected to Builders’ proposed ownership structure, which “raises significant supervisory concerns about the accountability of the bank’s ultimate parent.” While Block claims it would own 100% of Builders, its application states that ownership would be “held indirectly through two intermediate holding companies.” The ICBA claims that the description “places two layers between the Bank and its ultimate parent” and the application “provides no public explanation for this layering.”
There’s little love lost between traditional bankers and the crypto sector, with the latter blaming the former for helping to kill the Senate’s digital asset market structure bill (the CLARITY Act) last month. Large or small, most banks felt that CLARITY’s contentious stablecoin ‘rewards’ language didn’t go far enough to assuage their fears of ‘deposit flight’ by customers seeking greater returns from crypto platforms.
OCC says crypto debanking happened, really
If the OCC or Gould are worried about the ICBA suit, they don’t appear to have commented publicly about it. Instead, the OCC appears focused on fulfilling President Trump’s demands for probes into the alleged ‘debanking’ of individuals and entities during the four years Joe Biden occupied the White House.
On October 14, the OCC released a report that Gould says “provides irrefutable evidence” that the nine largest banks under OCC supervision “denied, debanked and discriminated against customers and lawful businesses.”
The report claims these banks’ “broad reputation risk policies—which lacked clear standards and objective, risk-based criteria—disadvantaged certain Americans based on their political, religious, or social views or based on their lawful business activities.”
The Biden administration’s alleged debanking was long ago assigned an official conspiracy theory designation (Operation ChokePoint 2.0) by the crypto sector. And yet, the OCC report makes only a passing reference to digital assets, saying banks placed restrictions on “issuers, exchanges, or administrators, often attributed to financial crime considerations.”
Instead, the report largely focuses on companies involved in the coal, oil and gas, firearms, prison, tobacco, and vaping sectors. In remarks made at a press conference announcing the report, Gould didn’t mention crypto at all.
That stands in contrast to a report issued by the House of Representatives Financial Services Committee last December. That report detailed “at least 30 entities and individuals engaging in digital asset-related activities” who were treated poorly due to the Biden administration exerting “substantial pressure” on banks “to discourage these entities from engaging in digital asset-related activities.
The OCC report was produced in response to an executive order Trump issued in August 2025, although the actions since taken by Trump, the OCC, and other federal agencies have removed most of the regulatory barriers to crypto financial access/growth. Does this mean we’ve heard the last of these complaints from the crypto sector? The ICBA’s lawsuit suggests not, but time will tell.
Bank of America fined $1.2 billion for shoddy AML compliance
Many prominent crypto figures were positively giddy on Tuesday after the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced a $1.2 billion penalty against Bank of America (BoA) (NASDAQ: BAC). BoA was penalized for its “failure to mitigate and report priority national security risks, including Chinese Money Laundering Networks and illicit finance along the southwest border.”
The fine is the third-largest in Treasury history and includes a $750 million penalty imposed by the OCC, the largest the OCC has dished out to date. The sum also includes an $11.6 million settlement with Treasury’s Office of Foreign Assets Control (OFAC) for 475 apparent violations of economic sanctions programs, including those related to “Iran, Russia, narcotics, and global terrorism.”
The OCC slammed BoA’s Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance programs as “deficient and ineffective,” failing to report over $5 billion in suspicious activities. Incredibly, BoA was hit with a cease-and-desist order in December 2024 that required the bank to beef up its BSA/AML compliance, but “failed to prioritize” these efforts.
Given the historic condemnations of the crypto sector as a key factor in facilitating crime, sanctions evasion and money laundering, some individuals who’ve been on the receiving end of this abuse were quick to celebrate BoA’s comeuppance.
Crypto advocate Nic Carter tweeted, “TLDR: we weren’t imagining it. OCP2.0 was real.” Paul Grewal, former chief legal officer for the Coinbase (NASDAQ: COIN) exchange, retweeted Carter’s post, adding “so it wasn’t all just in our heads.”
Changpeng ‘CZ’ Zhao, founder of the Binance exchange, tweeted this sarcastic observation: “No one went to prison. No home confinement. No [deferred prosecution agreements]. No one was even charged. Water under the bridge. Onwards!”
For the record, CZ spent several months in a U.S. prison after Binance reached a $4.3 billion settlement with federal authorities in 2023 for its similarly slapdash approach to BSA/AML compliance. CZ was pardoned by President Trump in October 2025.
Binance under investigation for violating 2023 settlement?
CZ might have been pardoned, but that hasn’t stopped reports that Binance could be facing additional U.S. law enforcement actions due to the exchange’s facilitation of money movement by sanctioned Iranian individuals/entities.
Last month, Bloomberg reported that the Manhattan U.S. Attorney’s office and the Department of Justice’s D.C. criminal division were investigating whether Binance had “knowingly” permitted sanctioned customers to trade on its platform. On October 9, Bloomberg followed up with a report indicating that the DoJ was trying to determine whether Binance’s actions amounted to a breach of its 2023 U.S. settlement.
Tysen Duva, head of the DoJ’s criminal division, confirmed that there is “an ongoing investigation there that we are involved with” but declined to offer specifics. Instead, Duva offered praise for “the positive part of the relationship that we’re trying to build” with crypto operators and “we’re very excited to really press that and continue this.”
That same day, the Wall Street Journal reported on an 80-page report that Binance prepared this spring at the request of the financial intelligence unit of the United Arab Emirates, where Binance has established the closest thing to a headquarters.
The report details how Babak Zanjani, a sanctioned financier for Iran’s Islamic Revolutionary Guard Corps (IRGC), organized a network of 21 Binance accounts that conducted $850 million in transactions, of which at least $67 million flowed to the IRGC. Binance said it blocked the accounts late last year and ‘offboarded’ the last of Zanjani’s accounts in May 2026.
Zanjani was previously flagged by TRM Labs in its 2026 Crypto Crime report as the power behind two bogus UK-based exchanges that helped move $1 billion on behalf of the IRGC over a two-year period. The transactions “were conducted almost entirely in [Tether’s] USDT on the TRON blockchain.”
The Binance report notes that Zanjani established a ‘cluster’ of trading and payment firms across the Middle East in 2023 that Binance ultimately concluded were likely “a cover up for sanctions evasion.” One of the Binance accounts was accessed from Tehran over a dozen times. Binance eventually acted on the accounts following requests for cooperation from authorities in the U.S., Israel, and Switzerland.
A Binance spokesperson told the Journal that the exchange “continues to cooperate with law enforcement globally, and any suggestion that total account trading volume equals funds that reached the IRGC is materially misleading.”
FAQs:
Why is the ICBA suing the OCC?
The Independent Community Bankers of America sued the OCC on October 2, claiming it exceeded its authority by chartering crypto-focused national trust banks. The group says crypto firms get lighter regulation than community banks, creating an unfair competitive disadvantage.
What is a national trust bank charter?
A national trust charter lets a firm custody assets under federal OCC supervision. The ICBA says it pre-empts many state regulations, including consumer protection laws, while avoiding the stricter requirements and costs of a traditional bank charter.
How many crypto trust banks has the OCC approved?
Since Trump took office in 2025, the OCC has approved or conditionally approved 21 new trust banks, 13 of them crypto-related. Catena Labs won approval; World Liberty Financial, Block, Rain, and Modern Treasury have applied.
What does the ICBA lawsuit ask the court to do?
The ICBA asks the U.S. District Court for D.C. to declare the OCC’s new chartering powers unlawful, vacate its March rule change, and rescind Protego Holdings’ February conditional approval. It also objected to Block’s Builders Bank & Trust application.
How much was Bank of America fined for AML failures?
FinCEN announced a $1.2 billion penalty against Bank of America for failing to mitigate national security risks, including Chinese money laundering networks. It includes a $750 million OCC fine, the OCC’s largest ever, and an $11.6 million OFAC settlement.
What did the OCC debanking report find?
Released October 14, the OCC report says the nine largest banks it supervises denied services to lawful businesses using vague reputation-risk policies. It focuses mainly on coal, oil and gas, firearms, prison, and tobacco sectors, with only a passing mention of crypto.
Is Binance under investigation again?
Yes. Bloomberg reported U.S. prosecutors are examining whether Binance knowingly let sanctioned customers trade and whether that breached its 2023 settlement. DoJ criminal division head Tysen Duva confirmed an ongoing investigation but declined to give specifics.
What is the Binance Babak Zanjani Iran case?
Binance’s report says sanctioned IRGC financier Babak Zanjani ran 21 accounts moving $850 million, with at least $67 million reaching the IRGC. Binance says it offboarded the last account in May 2026 and disputes that total volume equals IRGC funds.
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