ICBA Cautions That Sony's Stablecoin May Pose Risks to Financial System Stability

The Independent Community Bankers of America (ICBA) has initiated both legal and regulatory actions targeting

Bank’s intention to enter the cryptocurrency market, calling on the Office of the Comptroller of the Currency (OCC) to deny the Japanese corporation’s request to launch Connectia Trust, that aims to issue a stablecoin backed by the U.S. dollar and provide digital asset custody. In a letter dated Nov. 6, the ICBA cautioned the OCC that Sony’s proposal could undermine financial stability, mislead consumers, and weaken the regulatory protections that underpin conventional banking.

The ICBA’s main contention is that Connectia’s stablecoin approach

, a role typically limited to insured banks, while avoiding essential responsibilities such as Community Reinvestment Act (CRA) compliance and FDIC insurance. The organization pointed out that, by law, trust banks cannot accept deposits, and Connectia’s stablecoin—described as a “digital alternative” to cash—could mislead users into believing it is equivalent to a bank deposit. According to the ICBA, this situation creates a regulatory loophole, allowing Sony to reap the advantages of a bank charter without meeting all regulatory requirements.

Issues around transparency add further complexity to the proposal.

leaves out vital information regarding the makeup of reserves, procedures for redemptions during financial stress, and strategies for handling cyberattacks or liquidity crises. The ICBA urged the OCC to require a more detailed business plan, warning that approving the application without full disclosure could set a risky precedent for future crypto banking initiatives.

The ICBA also highlighted potential systemic dangers due to Connectia’s possible scale.

, they warned, it might necessitate the rapid sale of U.S. Treasury assets to satisfy redemption requests, potentially destabilizing the broader market. The ICBA noted that the OCC has not had to appoint a receiver for an uninsured national bank since 1933 and lacks the necessary tools to address such an event. Managing crypto assets in a receivership would require new levels of coordination with blockchain systems, and mishandling could result in customers permanently losing access to their assets.

If Sony’s application is approved, it would place the company alongside crypto-focused firms like Coinbase and Circle at the forefront of national digital banking. Still, the ICBA characterized the move as a threat to community banks, arguing that large corporations could gain an unfair advantage by bypassing established banking rules. “This isn’t solely about Sony,” an ICBA spokesperson remarked. “It’s about maintaining the integrity of the banking sector and ensuring a level playing field for community banks.”

The OCC has yet to reply to the letter but is anticipated to make a decision in the near future. Sony’s legal representatives have described the proposal as a “responsible innovation” that meets contemporary financial demands, though they have not addressed the ICBA’s specific objections. As the situation develops, the outcome may influence how crypto banking is regulated in the U.S., with significant consequences for both major corporations and local banks.