Warren says Ripple's bank charter was granted illegally

Senator Elizabeth Warren said Ripple's national bank charter was granted illegally, challenging the company's months-long effort to position XRP within the regulated US financial system.

Warren, the Massachusetts Democrat and senior member of the Senate Banking Committee, said the Office of the Comptroller of the Currency exceeded its authority in granting the charter, according to a statement.

Ripple had promoted the charter as a milestone that would bring XRP into the federal banking framework, distinguishing it from digital assets operating without US regulatory oversight. The OCC granted the charter months ago, and Ripple had since used it to pitch its cross-border payment services to financial institutions.

The challenge introduces new regulatory risk for Ripple and XRP holders, potentially undermining the token's standing with institutional partners and triggering further scrutiny from federal banking regulators. If Warren's position gains traction, the OCC could face pressure to revoke or suspend the charter.

The senator's intervention comes as Ripple sought to use the charter to expand its presence in the US payments market. Warren has been a vocal critic of the cryptocurrency industry, calling for stricter oversight of digital asset firms and questioning whether existing banking laws adequately cover crypto activities. The OCC has not yet responded to the senator's claims.

XRP's regulatory status has been a central question since the SEC's lawsuit against Ripple, which concluded with a mixed ruling on whether the token constitutes a security. The bank charter was seen by Ripple as a way to resolve that ambiguity by operating under federal banking supervision. Warren's statement now casts doubt on that strategy.

The challenge adds to a growing list of regulatory headwinds facing the crypto industry in the US, where lawmakers remain divided over how to classify and oversee digital assets. Ripple's charter was viewed by some market participants as a potential template for other crypto firms seeking federal banking status. Warren's intervention could delay or derail similar applications from other companies exploring the same path.

The OCC's chartering authority has been a subject of debate since the agency began granting limited-purpose charters to non-bank financial firms. Warren's argument that the OCC overstepped its statutory authority echoes previous legal challenges to the agency's fintech charter program. A similar effort to create a special-purpose national bank charter for fintech companies was blocked in court in 2023.

For XRP holders, the regulatory uncertainty could weigh on the token's price and delay institutional adoption. Ripple's ability to offer regulated banking services in the US now faces a new legal and political hurdle, with no clear resolution timeline.

This article is for informational purposes only and does not constitute investment advice.