Stripe’s stablecoin subsidiary, Bridge Infrastructure, recently filed for a national trust bank charter with the federal banking regulator. In response, four prominent advocacy groups have formally submitted objections, warning that the proposed charter could undermine consumer protections, concentrate market power, and introduce systemic risks into the burgeoning stablecoin ecosystem.
Advocacy Groups Raise Alarm
Americans for Financial Reform, Public Citizen, the Electronic Frontier Foundation, and the National Community Reinvestment Coalition each voiced deep concerns about the charter application. They argue that granting a trust charter to a major tech-backed stablecoin issuer risks sidelining smaller, community-oriented issuers and could erode the transparency standards that underpin public confidence in digital assets.
Notably, these organizations stressed the importance of robust capital requirements, regular third-party audits, and clear rules for redemption rights. Without stringent safeguards, they cautioned, users of Bridge Infrastructure’s stablecoin might face unexpected freezes or devaluation, echoing past market disruptions when trust in collateral reserves faltered.
Regulatory Oversight and Concerns
The Office of the Comptroller of the Currency (OCC) has broad authority to charter national trust banks, but critics argue that the existing framework is ill-suited for stablecoin operations. The four groups emphasized that traditional bank supervision focuses on deposit insurance and systemic risk in legacy finance, whereas stablecoins demand real-time transparency into reserve holdings and rapid redemption mechanisms.
They further warned that permitting a tech giant’s subsidiary to operate under a trust charter without direct oversight from the central bank or clear rules on crypto collateral could trigger regulatory arbitrage. Such a loophole might encourage other large platforms to pursue similar charters, potentially sidelining smaller firms and weakening the overall resilience of the stablecoin market.
Implications for the Future of Stablecoins
The objections from these four organizations highlight a broader debate over how best to integrate stablecoins into the regulated financial system. As lawmakers and regulators worldwide draft new digital asset frameworks, the outcome of Bridge Infrastructure’s charter application could set a critical precedent.
If the OCC approves the charter without addressing the raised issues, the move may tilt the playing field toward well-capitalized incumbents and foster a more consolidated stablecoin landscape. Conversely, a stringent review process that enforces enhanced transparency and consumer rights could bolster trust in algorithmic and asset-backed digital currencies alike.