OCC Urged to Reject Sony Bank’s Effort to Join the Crypto Banking Sector

A leading US banking group has urged regulators to stop Sony Bank’s crypto venture, warning against its plan for a national trust that would issue a dollar-pegged stablecoin.

Sony stunned markets last month when its banking arm filed to form Connectia Trust, a federally chartered institution that would issue a $1-backed stablecoin, manage the reserves behind it, and provide digital asset custody and management.

If approved, Sony would join a short list of major firms seeking national digital bank status, alongside Coinbase, Circle, Paxos, Stripe and Ripple.

In a Nov. 6 letter to the OCC, the Independent Community Bankers of America (ICBA) said it “strongly opposes” Sony Bank’s application and argued the proposal leans on an impermissible reading of trust bank powers.

Group Accuses Sony Of Seeking Bank Benefits Without Obligations

Further, the group warned that customers could confuse a stablecoin with a bank deposit, even though national trust banks are barred by statute from taking deposits.

ICBA said trust charters exist for fiduciary work like estate planning and investment management, not for deposit-style products. It asked the OCC to reject the plan, warning it could mislead customers and create risks in a failure.

The group said Connectia would “engage in the business of banking” without FDIC insurance or Community Reinvestment Act obligations, a structure it called an end run that captures the benefits of a bank charter without the full rulebook.

ICBA added that Connectia would not have to reinvest in low and moderate-income communities, even as it could gather funds from them.

Critics Say Sony’s Application Lacks Key Details On Reserves And Redemption

On payments, ICBA pointed to the deposit-like functionality of stablecoins, which can move electronically, be spent at the point of sale, and be redeemed one-for-one for dollars, features it said mirror checking accounts that trust banks are not allowed to offer.

The filing also raises Bank Holding Company Act issues, ICBA said, because national trust banks can escape holding-company supervision only if they meet strict conditions. The letter questioned whether Connectia’s non-fiduciary custody plans and potential payment features would satisfy those tests, a failure that could pull Sony’s corporate parents into bank holding company regulation.

Transparency became a second front. The public version of Sony’s application omits key details, ICBA said, including reserve composition, redemption mechanics in stress, the projected issuance scale, and contingency plans for runs or cyber events.

It asked the OCC to demand a fuller business plan before any decision, arguing that approving under a veil of secrecy would set a poor precedent.

Group Warns OCC Lacks Tools To Resolve Large Stablecoin Collapse

ICBA also questioned whether the OCC could safely resolve Connectia if it failed. The agency has not appointed a receiver for an uninsured national bank since 1933, and its rules were written for traditional trust companies, not a large stablecoin issuer connected to volatile crypto markets and complex blockchain infrastructure.

A run on a Connectia token could force rapid sales of Treasuries and spark broader stress, the letter said. Handing off crypto custody during a receivership would require coordinating key shards and signing systems, a process the OCC has never performed, and any failure could permanently strand customer assets.

ICBA’s bottom line was blunt, the OCC should deny the application because Connectia’s model exceeds the traditional scope of trust banks, mimics demand deposits, and fails the trust exemption under the Bank Holding Company Act.

It added that approval would weaken the historical separation of banking and commerce and tilt the field against community banks.

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