- Trending
- Comments
- Latest
A national trade group representing community banks is urging federal regulators to reject Sony Bank’s application for a trust charter, warning that the proposal would allow the Japanese financial giant to issue stablecoins that function like bank deposits without adhering to traditional banking safeguards.
The Independent Community Bankers of America (ICBA) told the Office of the Comptroller of the Currency last week that Sony’s proposed subsidiary, Connectia Trust, relies on “an impermissible reinterpretation” of federal law that could expose consumers to risk while exempting the company from deposit insurance and community lending requirements that apply to conventional banks.
In a letter sent last week to the Office of the Comptroller of the Currency (OCC), the ICBA said the Sony crypto bank application relied on “an impermissible reinterpretation” of federal law. The group argued that Sony Bank’s structure could “foreseeably lead to consumer confusion and consumer harm in the event of insolvency.”
Sony Bank applied in October to create Connectia Trust, which would issue dollar-backed stablecoins, manage reserve assets, and provide digital-asset custody services.
But the ICBA contends that the Sony crypto bank model mirrors many features of traditional deposits—electronic transfers, spending capabilities, and one-to-one redemption—without adhering to rules that conventional banks must follow.
“This approach appears designed by Sony Bank to receive the benefits of a U.S. bank charter without becoming subject to the full scope of U.S. bank regulations,” — Mickey Marshall, Vice President and Regulatory Counsel, ICBA.
The association also questioned whether Connectia meets the narrow exemptions of the Bank Holding Company Act, which applies only to entities operating “solely in a trust or fiduciary capacity.”
According to the ICBA, the Sony crypto bank framework could violate these limits if Connectia were to issue debit-like products or offer features comparable to check-withdrawable deposits.
The group additionally called for deeper scrutiny of Sony Group Corporation’s roughly 20% stake in Sony Financial Group, asserting that the relationship “warrants further investigation of whether a controlling influence exists” that may trigger additional regulatory obligations.
Sony Bank’s bid arrives as several major crypto firms pursue similar federal trust charters. The Sony crypto bank effort now joins applications from Coinbase, Crypto.com, Circle, Ripple, Bridge (the stablecoin affiliate of Stripe), and Paxos. This surge follows the July passage of the GENIUS Act, which provided clearer guidance for issuers of asset-backed digital currencies and helped push the stablecoin market past $311 billion.
The ICBA argues that Connectia’s similarity to deposit-taking institutions—without deposit insurance or Community Reinvestment Act requirements—shows why regulators must closely examine the Sony crypto bank structure.
It further warned that the OCC has not handled the failure of an uninsured national bank since 1933 and may lack the technical capacity to unwind a collapsed crypto operation. The association cautioned that “a single failure in key reassembly or system migration could result in permanent loss of access to billions in customer assets.”
These concerns mirror objections the ICBA filed earlier against Coinbase’s trust charter application. In that case, Coinbase Chief Legal Officer Paul Grewal accused trade groups of “trying to dig regulatory moats” rather than protecting consumers—an argument that resonates in the broader clash over the Sony crypto bank proposal.
Not everyone agrees with the ICBA’s position. Some industry observers argue that resistance to the Sony crypto bank plan reflects established banks’ unease about competition. Kadan Stadelmann, Chief Technology Officer at Komodo Platform, told Decrypt that the lobbying effort is shaped by entrenched institutional interests.
“The risks to consumers of stablecoins are being exaggerated in the name of protectionism by big banks of their dominance in western finance,” Kadan Stadelmann, CTO, Komodo Platform.
He said claims about Connectia’s threat to financial stability are “overstated and driven by big-bank interests,” emphasizing that stablecoins decentralize financial power and potentially expand services to underserved populations.
Stadelmann added that regulators should balance innovation and consumer protection, especially as digital assets become more embedded in global finance. Stablecoins, he argued, could “minimize bank-run risks” through on-chain transparency, a principle that supporters say strengthens the case for the Sony crypto bank model.
The OCC has not indicated a timeline for ruling on the Sony crypto bank application. Still, industry analysts say the outcome could set a precedent for future stablecoin issuers seeking federal recognition.
If approved, the Sony crypto bank charter would position Sony as one of the first multinational corporations outside the traditional U.S. banking system to operate a federally supervised stablecoin trust.
As regulators weigh arguments from both sides, the debate underscores a larger question: should large consumer brands be allowed to build deposit-like digital currency systems without becoming full-scale banks?
The answer will influence not only Sony crypto bank ambitions, but also how the next generation of financial services evolves across technology, banking, and digital assets.
