Five Crypto Firms Get Coveted US Bank-Charter Nod
TL;DR
Five crypto firms received preliminary US bank charter approval, signaling a shift toward embracing the industry. This allows them limited banking functions like asset custody, marking a regulatory change from previous administrations.
Key Takeaways
- •Five cryptocurrency firms (Circle, Ripple, BitGo, Fidelity Digital Assets, Paxos) received conditional national trust bank charters from the OCC.
- •This approval reflects a changing regulatory stance under the Trump administration, contrasting with the Biden administration's more restrictive approach.
- •Trust bank charters allow crypto firms to perform limited banking functions like asset custody but not deposit-taking or lending.
- •The move signals growing legitimacy for crypto in the financial system and introduces competitive pressure on traditional banks.
- •Other crypto firms like Coinbase have pending applications, indicating further industry integration into banking.
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Five cryptocurrency firms received preliminary approval to perform certain banking functions from a US regulator on Friday, marking the latest step in the White House‘s embrace of what was once viewed as a risky, fringe industry.
The Office of the Comptroller of the Currency offered conditional approval for national trust bank charters that Circle Internet Group Inc., Ripple, BitGo Inc., Fidelity’s digital assets arm and Paxos had requested, according to a press release.
“New entrants into the federal banking sector are good for consumers, the banking industry and the economy,” Comptroller of the Currency Jonathan Gould said in a statement. “They provide access to new products, services and sources of credit to consumers, and ensure a dynamic, competitive and diverse banking system.”
The approval of the five firms this week comes as President Donald Trump has sought to usher in what’s widely viewed as a golden age for the crypto industry. The president’s sons are involved with various crypto companies and the Trump family has generated billions of dollars of wealth from digital-asset ventures.
In July, he signed the first federal regulatory framework for stablecoins, a type of cryptocurrency that aims to trade one-for-one with a traditional currency, often the US dollar. That law, known as the Genius Act, also expanded the authority of the OCC to include non-bank payment stablecoin issuers like Circle and Paxos. The regulatory posture is a marked difference from the Biden administration, which tried to root out bad actors and clamp down on the industry, especially after crypto exchange FTX fell apart.
Becoming a trust bank does not allow the firms to fully act as traditional banks. For instance, the cannot take deposits or lend, but they can hold assets in custody the way a well-known firm like Bank of New York Mellon Corp. or State Street Corp. can.
Read More: Why Fintech Companies Want to Become Banks Right Now
In addition to granting charters, US bank regulators including the Federal Reserve and Federal Deposit Insurance Corp. are looking for other ways to welcome avant-garde firms into the financial system. For instance, the Fed is weighing whether to grant financial-technology firms access to payments systems like FedWire through so-called “skinny” master accounts.
These developments do not just signal legitimacy for newcomers, but also a competitive risk for established lenders, said Karen Shaw Petrou, a longtime policy analyst and managing partner of Federal Financial Analytics.
“The OCC is making it more than clear that the new light-touch regulatory construct is not all upside for traditional banks,” she said. “The OCC and FDIC, and perhaps even the Fed, will look far more kindly on nontraditional companies outside many rules that are allowed to offer services that compete directly with what I think must now be called legacy banks.”
“It’s very much a signal of how the government is embracing cryptoassets and blockchain-enabled assets like stablecoins to change the financial system,” Charles Cascarilla, CEO and co-founder of Paxos, said in an interview. “Under the prior administration, things were very hostile following the collapse of FTX and now you have a much different position for the whole industry.”
Anchorage Digital Bank was the first crypto company to get a national trust charter back in 2021. Other crypto firms whose applications are pending with the OCC include Coinbase Global Inc., Bridge Network and Crypto.com.