WASHINGTON—The Bank Policy Institute (BPI) has released a series of letters urging the Office of the Comptroller of the Currency to reject five pending limited-purpose national trust company charter applications submitted by digital assets firms Ripple, Circle, Paxos and National Digital Trust Company, and payments firm Wise.
These applications, BPI stated, reflect a growing trend of nonbank financial companies seeking limited-purpose national trust bank charters, despite not planning to operate genuine trust companies.
BPI cautions that endorsing this pathway and allowing firms to choose a lighter regulatory touch while offering bank-like products could blur the statutory boundary of what it means to be a “bank,” heighten systemic risk and undermine the credibility of the national banking charter itself.
“BPI supports efforts to bring innovative new products and services into the regulated ecosystem and agrees that digital assets have a role to play in the U.S. financial system, provided that they are subject to the same rules and responsibilities as every other chartered institution engaging in the same activities,” stated Paige Pidano Paridon, BPI executive vice president and co-head of regulatory affairs. “Companies should not receive trust charters unless they plan to operate as genuine trust companies. If they want to engage in traditional banking activities, they should seek full-service banking charters. Rigorous, uniform standards strengthen America’s global competitiveness and offer customers the confidence and protections that define a well-regulated banking system.”
Blurring the Boundaries Of Permissible Trust Activities
Across all five applications, BPI notes that the OCC’s trust charter authority is limited to institutions predominantly engaged in trust and fiduciary activities. However, the applicants propose to engage in activities such as managing stablecoin reserves, facilitating payments and taking deposits.
“These activities closely mirror core banking functions, yet the applicants would avoid obtaining deposit insurance, nor would they be subject to consolidated supervision and consumer protections and other safeguards required of full-service national banks and their parent companies,” BPI said.