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Crypto Reporter
Shalini Nagarajan
Crypto Reporter
Shalini Nagarajan
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A major US banking group has urged regulators to stop Sony Bank’s crypto firm, warning against its plan for a national trust that will issue a dollar-denominated bond. stablecoin.
Sony stunned the markets last month when its banking arm presented to form Connectia Trusta federal institution that issues a stablecoin backed by $1, manages the reserves behind it, and provides custody and management of digital assets.
If approved, Sony will join a short list of large firms seeking national digital bank status, alongside Coinbase, Circle, Paxos, Stripe and Ripple.
In a Letter of November 6 to the OCC, the Independent Community Bankers of America (ICBA) said it “strongly opposes” Sony Bank’s application and argues that the proposal relies on an impermissible reading of banking trust powers.
Group accuses Sony of seeking bank benefits without obligations
In addition, the group warned that customers could confuse a stablecoin with a bank deposit, although national trust banks are prevented by statute from taking deposits.
ICBA said trust charters exist for fiduciary work such as estate planning and investment management, not for deposit-style products. He asked the OCC to reject the plan, warning that it could mislead customers and create risks in a bankruptcy.
The group said Connectia was “engaging in the banking business” without FDIC insurance or Community Reinvestment Act obligations, a structure it called an end run that captures the benefits of a bank card without full regulation.
The ICBA added that Connectia would not have to reinvest in low- and moderate-income communities, even if it could raise funds from them.
Critics say Sony’s application lacks key details about reservations and redemption
On payments, ICBA indicated the functionality of stablecoins, which can be moved electronically, be spent at the point of sale, and be reimbursed one-for-one for dollars, features that he said mirror checks that trusted banks are not allowed to offer.
The filing also raises issues of the Bank Holding Company Act, ICBA said, because national trust banks can escape the supervision of the holding company only if they meet strict conditions. The letter asked whether Connectia’s non-fiduciary custody plans and potential payment functions meet those tests, a failure that could cross Sony’s corporate parent into bank holding regulations.
Transparency has become a second front. The public version of Sony’s application omits key details, ICBA said, including reserve composition, stress redemption mechanics, the scale of expected issuance, and contingency plans for runs or cyber events.
He asked the OCC to require a more comprehensive business plan before any decision, arguing that approval under a veil of secrecy would set a poor precedent.
Group warns that the OCC lacks tools to resolve a major collapse of Stablecoin
ICBA also questioned whether the OCC could safely resolve Connectia if it fails. The agency hasn’t 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 Connectia’s token could force a quick sell-off of Treasuries and spread wider stress, the letter said. Handing over custody of crypto during a reception would require coordinating key shards and signature systems, a process the OCC has never performed, and any failure could permanently freeze clients’ assets.
ICBA’s bottom line was blunt, the OCC should reject the application because Connectia’s model exceeds the traditional purpose of trust banks, mimics demand deposits, and fails the trust exemption under the Bank Holding Company Act.
He added that approval would weaken the historic separation of banking and commerce and tilt the field against community banks.
