Elizabeth Warren is pressing the OCC over national trust charters that could give crypto firms a route toward the Federal Reserve system.
Senator Elizabeth Warren is pressing the Office of the Comptroller of the Currency (OCC) over its decision to approve national trust charters for crypto companies, Bloomberg has learned.
Warren wrote to OCC chief Jonathan Gould that some companies appear “seemingly ineligible” for that status, adding that the regulator has approved at least nine national trust charters for crypto firms that “appear to go far beyond the narrow set of activities permitted by law” in an “apparent violation of the National Bank Act.”
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A charter for a national trust isn’t the same as a full bank charter, but it may assist a firm in gaining access to the payment services of the Fed, while not being subject to all the regulations governing full-service national banks since the trust doesn’t enjoy FDIC insurance.
That is the core of Warren’s complaint, the report notes. Trust companies are usually narrower businesses, but she said some crypto firms appear to be using the structure for activities closer to regular banking.
Stablecoin Firms Seek Bank Rails
The battle emerges from attempts by stablecoin providers and other crypto companies to get closer to banks due to the more friendly attitude towards cryptocurrencies by the current U.S. administration.
Bloomberg noted stablecoin companies have started seeking national trust charters so they can hold short-term government debt and other high-grade assets used to back dollar-pegged tokens. Paxos and Coinbase affiliates have been granted approvals, but World Liberty Trust, which is associated with the Trump-backed World Liberty Financial, is still under consideration.
Warren said the approvals appeared to let firms offer loans, run trading platforms, send payments and engage in “activities closely related to deposit-taking” while using the trust-company regime.
The senator requested that Gould disclose the confidential sections of the approved applications and determine whether the OCC’s new rule allows trust companies to perform “non-fiduciary activities” without the same regulatory scrutiny and obligations imposed on national banks.
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