The lawsuit, filed Friday, challenges regulators’ efforts to grant bank charters to a growing number of digital-asset companies.
Community banking groups argue that the approvals could allow crypto firms to operate with privileges traditionally reserved for regulated banks, including access to the nation’s payments system.
The case adds a new front to the long-running conflict between established financial institutions and the cryptocurrency industry, which has pressed for broader recognition within the U.S. banking system.
The dispute also places federal banking regulators under scrutiny as they weigh whether crypto companies can meet requirements involving capital, risk management and consumer protection.
For community banks, the issue is both competitive and regulatory: They say crypto firms could gain an advantage without facing the same oversight and obligations.
The administration and regulators now face a legal challenge that could help determine how far cryptocurrency companies may move into mainstream banking.