Federal Crypto Banking Framework Faces Court Challenge
On October 2, the Independent Community Bankers of America filed suit against the Office of the Comptroller of the Currency, challenging the agency's March 2026 National Bank Chartering rule and related interpretive guidance. The complaint contests the OCC's approval of national trust banks that do not accept deposits and questions whether the framework complies with federal law's fiduciary requirements.
For crypto custodians and businesses considering national trust charters, the litigation creates planning uncertainty around charter-dependent financing, product launches, and commercial agreements. The filing does not invalidate the framework but signals potential regulatory obstacles ahead.
U.S. Treasury Designates A7 Network for Sanctions Evasion
On October 1, the Treasury Department announced coordinated enforcement action against the A7 Network, designating it as a significant transnational criminal organization connected to Russia and used by Iran for sanctions evasion. The Office of Foreign Assets Control applied blocking measures, while the Financial Crimes Enforcement Network proposed restrictions on fund transfers involving the network's sub-agents. Treasury identified the ruble-backed A7A5 token as part of the network's digital-asset infrastructure.
Exchanges, payment businesses, and over-the-counter desks are advised to review exposure beyond token names alone, examining counterparty ownership, intermediaries, and transaction documentation to identify suspicious activity.
Senate Report Criticizes Tether's Sanctions Compliance
On September 28, Senator Richard Blumenthal released a Senate Permanent Subcommittee on Investigations report examining 846 wallets associated with Iran and sanctioned entities. The report criticized Tether's controls for preventing transfers to these accounts. In response, Tether stated that its actions resulted in approximately $550 million in Iran-linked assets being frozen during 2026 through cooperation with authorities.
Businesses using stablecoins should assess their own exposure to sanctions risk, including counterparty relationships and fund access interruptions, rather than relying solely on an issuer's compliance program.
Europe Proposes Broader Crypto Regulations Under MiCA Review
On September 30, the European Securities and Markets Authority published recommendations for the European Commission's review of MiCA regulations. The proposals include stronger supervisory powers, tighter marketing standards, and targeted requirements for staking, lending, and borrowing activities. ESMA also proposed regulated service definitions covering intermediaries that provide customer access to decentralized finance protocols, while recognizing that open-source development and permissionless infrastructure should not automatically constitute regulated intermediation.
Companies developing European products should document their intermediary roles, protocol-selection policies, and customer disclosures to clarify regulatory obligations.
UK Begins Accepting Crypto Authorization Applications
On September 30, the UK Financial Conduct Authority began accepting applications under the new crypto regulatory regime. The application period runs through February 28, 2027, ahead of the regime's October 25, 2027 commencement. Authorization is not automatic, and businesses must demonstrate compliance with governance, safeguarding, and financial resource standards.
Companies serving UK customers should immediately map their products against the new regulated activities and prepare board-approved implementation plans to ensure an orderly transition before the deadline.
