Since Congress enacted the Guiding and Establishing National Innovation for U.S. Stablecoins Act, better known as the GENIUS Act, the Office of the Comptroller of the Currency has seen a flood of applications from crypto firms seeking national trust bank charters. Stablecoin issuers, crypto exchanges, custody firms, and fintech payment companies are all racing to obtain a charter that, until recently, occupied a relatively obscure corner of American banking law.
The list of applicants is remarkable. Circle, Ripple, Coinbase, Paxos, BitGo, Fidelity, Crypto.com, and others have all received conditional approval to operate national trust banks. World Liberty Financial, the Trump family-backed crypto venture behind the USD1 stablecoin, has also applied for a trust charter. All told, the OCC has now approved at least nine crypto-controlled national trust banks with over a dozen additional applications pending.
For a crypto firm, the appeal is obvious. A national trust charter offers nationwide operations under a single federal regulator, federal preemption of many state laws, potential access to Federal Reserve payment infrastructure, and the prestige associated with a federal banking charter. Just as importantly, however, these charters allow firms to avoid many of the prudential safeguards and regulatory obligations imposed on traditional insured banks.
That combination has produced intense opposition from an unusual coalition of critics. Community banks, Wall Street banks, state banking regulators, consumer advocates, progressive lawmakers, and banking law scholars have all warned that the OCC is stretching the National Bank Act beyond recognition by allowing crypto firms to obtain national trust charters while engaging in broad non-fiduciary activities, including stablecoin issuance, brokerage, exchange services, staking, payments, and settlement.
The concerns are not merely academic. The OCC’s current approach threatens to create a parallel banking system populated by uninsured institutions engaged in deposit-like monetary activities without complying with the legal framework Congress imposed on traditional banks in exchange for access to the federal safety net. Stablecoins increasingly sit at the intersection of payments, Treasury markets, and short-term funding markets. Integrating them into the federally chartered banking system without corresponding prudential safeguards creates risks that extend far beyond the crypto ecosystem.
The controversy also arrives at a politically combustible moment. The Trump administration has aggressively pushed to integrate crypto into the traditional financial system while the President and his family maintain substantial financial interests in crypto ventures, including World Liberty Financial. The result is a deeply unstable mixture of financial deregulation, political conflicts of interest, and regulatory arbitrage.
This article explains why crypto firms are aggressively pursuing national trust bank charters, why many legal experts believe the OCC lacks authority to grant these charters, why the OCC’s new chartering rule represents a radical departure from longstanding banking law, and why the resulting system is likely to end in future stablecoin bailouts.
From Fiduciary Custodians to Crypto Platforms
National trust banks historically served a narrow and specialized purpose. They are chartered by the OCC and generally restricted to fiduciary activities and related services, such as acting as trustee, executor, administrator, investment adviser, or custodian. Unlike traditional commercial banks, national trust banks generally do not accept demand deposits or make loans. They are usually uninsured and therefore do not receive FDIC insurance. Their parent companies are also typically exempt from consolidated supervision under the Bank Holding Company Act, meaning the Federal Reserve does not regulate the broader corporate enterprise.
Historically, this framework generated relatively little controversy because trust companies typically engaged in narrow fiduciary activities involving personal trusts, estate administration, and corporate trusteeship. That changed with crypto.
Anchorage Digital became the first crypto firm to receive a national trust charter in January 2021, sneaking through in the final days of the first Trump administration. Anchorage originally operated as a South Dakota-chartered trust company before converting to a national trust bank. According to Anchorage CEO Nathan McCauley, the company’s original objective was to become a qualified custodian for institutional investors and registered investment advisers operating under the SEC’s custody rules. McCauley explained that Anchorage was built to allow registered investment advisers, highly regulated funds, and other institutional investors to hold digital assets in a secure and regulated way.
Anchorage’s conditional approval order shows that the bank was authorized to continue a broad range of crypto-related activities it had performed under South Dakota law, including digital asset custody, fiat custody through omnibus accounts, governance services, staking services, and settlement services. The charter allowed Anchorage to perform those activities nationwide under a single federal regulatory framework. Anchorage’s operating agreement with the OCC also demonstrates how different these institutions are from traditional banks. Rather than being subject to the full prudential framework applicable to insured depository institutions, Anchorage received customized minimum capital and liquidity requirements negotiated directly with the OCC.
The charter transformed Anchorage’s business. McCauley later explained that the charter provided regulatory clarity that dramatically expanded Anchorage’s institutional business and market standing. More importantly, Anchorage proved that a crypto firm could obtain a federal banking charter without becoming a traditional bank.
Anchorage has since expanded far beyond traditional custody into broader crypto infrastructure services, including stablecoin-related activities. Most notably, Anchorage now operates a white-label stablecoin issuance platform for third-party branded stablecoins, including USAT for Tether’s new U.S. affiliate. What began as a strategy to become a qualified custodian for institutional investors ultimately evolved into a template for the broader crypto industry’s entry into the federally chartered banking system.
GENIUS Made the Trust Charter a Stablecoin Prize
The GENIUS Act dramatically increased the value of national trust bank charters. Under GENIUS, there are effectively three paths to becoming a permitted payment stablecoin issuer. A company can issue stablecoins through a subsidiary of an insured depository institution, operate as a state-qualified payment stablecoin issuer, or become a federal qualified payment stablecoin issuer.
That last category is particularly important. GENIUS defines a federal qualified payment stablecoin issuer to include a nonbank entity approved by the OCC, an uninsured national bank chartered by the OCC and approved to issue payment stablecoins, or a federal branch of a non-U.S. bank approved by the OCC to issue payment stablecoins. Meanwhile, state-qualified issuers are effectively capped at $10 billion in outstanding stablecoins.
As a practical matter, any stablecoin issuer hoping to achieve meaningful scale has overwhelming incentives to pursue a federal charter, and the OCC has made it clear that it is eager to accommodate these firms.
In January 2026, the OCC proposed a short rule clarifying that national trust banks may engage in non-fiduciary activities in addition to fiduciary activities. The rule was finalized just weeks later, in February 2026. The OCC framed the rule as merely clarifying longstanding authority. Critics, however, immediately recognized the significance of the change. The rule effectively permits the OCC to charter uninsured national trust banks that engage substantially in non-fiduciary crypto-related activities while avoiding the regulatory framework applicable to traditional banks.
This matters enormously because national trust banks generally are not treated as banks under the Bank Holding Company Act. As a result, the Federal Reserve typically lacks authority to supervise the parent company and its affiliates on a consolidated basis. A crypto conglomerate can therefore obtain the benefits and legitimacy associated with a federal banking charter while avoiding many of the activity restrictions, capital requirements, supervisory expectations, and prudential safeguards that apply to traditional banking organizations.
National trust banks also generally avoid many of the core safeguards imposed on traditional banking organizations, including the Community Reinvestment Act, enhanced prudential standards under Dodd-Frank, the Volcker Rule, stress testing requirements, and prompt corrective action rules. At the same time, obtaining a federal trust charter may improve a firm’s ability to gain access to Federal Reserve payment infrastructure.
A few years ago, the Federal Reserve created a three-tier framework for evaluating master account requests, with uninsured institutions subject to heightened scrutiny because they pose elevated risks to the payment system. The Fed’s own guidance recognizes that, as a payment system operator, it must minimize the risks posed by institutions that access Federal Reserve services. But the policy environment has now shifted dramatically.
In December 2025, the Federal Reserve issued a request for information (RFI) regarding a proposed payment account structure clearly aimed at uninsured institutions engaged in payment innovation. The concept was originally floated by Federal Reserve Governor Christopher Waller, who described it as a “skinny master account.” Under the proposal, these payment accounts would function as a special-purpose alternative to traditional Federal Reserve master accounts, designed solely to facilitate the clearing and settlement of an institution’s own payments. To mitigate the risks such entities could pose to the Federal Reserve and the broader financial system, the accounts would not provide access to interest on reserve balances or the discount window, and end-of-day balances would be tightly constrained. The proposal also emphasized that the prototype would not alter the underlying legal standards governing eligibility for Federal Reserve accounts and services under the Federal Reserve Act.
Then, on May 19, 2026, President Trump signed an executive order titled “Integrating Financial Technology Innovation Into Regulatory Frameworks.” The order declares that the federal government “must update regulations to allow integration of digital assets and innovative technology into traditional financial services and payment systems.” It further directs federal financial regulators to review regulations, guidance, and supervisory practices that could be amended to streamline charter applications and other approvals for fintech firms.
In addition, the order requests that the Federal Reserve evaluate policies governing access to Reserve Bank payment accounts and payment services by uninsured depository institutions and nonbank firms engaged in digital assets and other novel financial activities. The implication is unmistakable. The White House wants crypto firms with national trust charters to obtain direct access to the Federal Reserve payments system.
That creates an extraordinary test of Federal Reserve independence. During his confirmation hearing to become Fed Chair, Kevin Warsh suggested that while monetary policy should remain independent, many of the Fed’s other functions should not necessarily be insulated from presidential direction. That view appears increasingly influential within conservative legal circles and among several members of the Supreme Court.
The Federal Reserve signaled its willingness to cooperate with the administration’s broader effort to integrate crypto firms into the banking system almost immediately. On May 20, 2026, one day after President Trump signed the executive order, the Fed released a formal proposal to establish a “payment account” that legally eligible financial institutions could use solely for clearing and settling payments. As the Fed acknowledged in its press release, the proposal “is substantially similar to the prototype outlined in the Board’s request for information (RFI) issued in December 2025.”
What the Applicants Say, and What the Charters Would Actually Do
One of the most remarkable aspects of the OCC’s chartering process is how little information the public has been given about what these firms actually plan to do. The banking industry repeatedly complained that the public portions of the applications provide only vague and superficial descriptions of the applicants’ intended business activities. BPI even filed Freedom of Information Act requests seeking additional details regarding several applications because the OCC had withheld most meaningful operational information from public view.
Even the limited public disclosures, however, reveal ambitions that extend far beyond traditional fiduciary activities.
Coinbase’s public application described a national trust company that would provide digital asset custody; hold customer fiat funds and digital assets in omnibus wallets; enable access to staking, financing, and trading services offered by other Coinbase entities; and explore the launch of payments products and other digital asset services. Its press release was even more direct. Coinbase said the charter would “open up opportunities” to launch products beyond custody, including payments and related services, with the confidence of regulatory clarity.
Circle was equally explicit about its stablecoin ambitions. Its First National Digital Currency Bank will oversee management of USDC – Circle’s stablecoin – reserves on behalf of Circle’s U.S. issuer, strengthen the infrastructure supporting the issuance and circulation of USDC, and offer digital asset custody services to institutional customers.
Ripple’s national trust bank will support the company’s payments business and manage reserves for RLUSD. Paxos’s trust bank will support stablecoin issuance, reserve management, custody, and crypto trading and liquidity services.
The OCC’s proposed rule implementing the GENIUS Act would go even further by expressly recognizing national trust banks as eligible federal qualified payment stablecoin issuers. In practical terms, the OCC is allowing federally chartered, uninsured trust banks to issue private money-like instruments while remaining outside much of the prudential and supervisory framework that governs traditional banking institutions.
The Legal Case Against the OCC’s Charter Push
Opposition to the OCC’s chartering strategy has brought together groups that rarely agree with one another. U.S. Senator Elizabeth Warren (D-MA), large banks, community banks, state banking regulators, consumer advocates, and academic banking law experts have all raised serious objections. Their institutional interests differ, but their core legal argument is the same: the OCC does not have the statutory authority to grant national trust charters to firms engaged primarily in non-fiduciary activities.
The Conference of State Bank Supervisors (CSBS) put the point plainly. Simply removing the word “fiduciary” from the OCC’s regulation does not change the National Bank Act requirement that national trust companies must be engaged predominantly in fiduciary activities. ICBA similarly warned that the OCC’s rule would permit the agency to charter limited-purpose trust banks that engage substantially in non-fiduciary activities.
BPI’s comment letters on recent national trust bank charter applications make the same point in more technical form. Section 27(a) of the National Bank Act permits the Comptroller to charter national banks whose activities are limited to those of a trust company and related activities. The ordinary meaning of that provision, read in statutory context, requires that the institution actually engage in the activities of a trust company in the first instance. Related activities may supplement the trust business, but they cannot replace it.
BPI also emphasized that trust companies traditionally differ from commercial banks because they do not perform core banking functions such as accepting demand deposits or making commercial loans. Their primary role is to take and administer trusts. A trust is a fiduciary relationship in which the person holding legal title to property must deal with that property for the benefit of another. Nonfiduciary custody, exchange services, payments, reserve management, staking, and stablecoin issuance do not become trust activities merely because they involve digital assets.
Professor Wilmarth’s recent paper provides the most comprehensive legal critique. He argues that the OCC has violated four separate federal statutes by approving crypto-related national trust charters. His argument begins with the National Bank Act itself, which does not give the OCC open-ended authority to create novel federal charters for any financial company that wants one. Section 27(a) validates national banks whose operations are limited to those of a trust company and related activities. It does not authorize the OCC to create full-scale crypto platforms under the label of national trust banks.
Wilmarth also argues that the OCC’s reliance on Section 24(Seventh), which authorizes national banks to engage in the business of banking, cannot solve the problem. If a firm is chartered as a national bank under the business-of-banking authority, it must satisfy the legal and regulatory requirements applicable to national banks. If it is chartered as a trust bank, its activities must be trust-company activities and related thereto. The OCC cannot mix and match authorities to create a bespoke charter that offers the benefits of a bank charter without the obligations attached to banking.
The Administrative Procedure Act creates another problem. Critics argue that the OCC’s 2021 interpretive letter and subsequent charter approvals effectively changed the legal framework for national trust banks without the required notice-and-comment rulemaking. The OCC’s 2026 rule was an attempt to cure that defect, but the rule does not define what non-fiduciary activities national trust banks may conduct or how much fiduciary activity is required. Instead, the OCC reserved for itself case-by-case discretion to decide what activities qualify as trust-company operations or related activities. That approach invites precisely the kind of regulatory arbitrage banking law is supposed to prevent.
Americans for Financial Reform (AFR), the National Community Reinvestment Coalition (NCRC), ICBA, CSBS, and BPI also raised broader policy concerns. They warned that the charters would allow crypto firms to combine banking and commerce, evade consolidated supervision, avoid Community Reinvest Act (CRA) obligations, receive the competitive advantages of federal preemption, create consumer protection gaps, and blur the boundary between federally regulated money and speculative crypto markets.
In March 2026, The Guardian reported that BPI was considering litigation against the OCC over the agency’s trust charter approvals. The banking industry has so far stopped short of filing suit, likely because they are simultaneously engaged in politically sensitive negotiations over pending crypto market structure legislation in the Senate, particularly efforts to close the stablecoin “payment of interest” loophole that currently allows third parties to offer rewards to stablecoin holders. Suing the OCC could undermine the industry’s leverage in that legislative fight, but the threat of litigation remains very real.
World Liberty Financial Turns the Legal Problem Into a Political Crisis
The controversy surrounding World Liberty Financial’s trust charter application illustrates why this debate extends beyond technical questions of banking law. In January 2026, a World Liberty Financial subsidiary applied to the OCC to establish World Liberty Trust Company, N.A., a national trust bank intended to issue and custody the USD1 stablecoin and provide related digital asset services.
The application immediately intensified concerns that the OCC’s chartering framework is enabling politically connected crypto firms to obtain federal banking privileges without complying with the full regulatory framework applicable to traditional banks. Those concerns are magnified by the Trump family’s direct financial stake in World Liberty Financial and by reports that politically connected foreign investors acquired substantial interests in the venture while simultaneously seeking favorable treatment from the administration on unrelated policy matters.
That dynamic has already triggered congressional scrutiny. In February 2026, Representative Gregory Meeks and more than thirty Democratic lawmakers sent a letter to Treasury Secretary Scott Bessent raising concerns about foreign ownership, conflicts of interest, and political influence in the chartering process. The lawmakers warned that the issue was no longer simply about crypto regulation, but about “whether our bank-chartering process is resilient to political and geopolitical pressure.”
The Comptroller’s Political Trap
World Liberty’s application puts Comptroller Jonathan Gould in an impossible position.
The central obstacle to passing crypto market structure legislation in the Senate is Democratic concern over President Trump’s crypto conflicts of interest. Democrats have sought ethics provisions that would restrict elected officials and their families from issuing, endorsing, or profiting from digital assets while in office. The White House has resisted those provisions.
If the OCC approves World Liberty’s trust charter application, the decision will intensify Democratic opposition, draw even greater attention to the President’s crypto-related conflicts of interest, and further reduce the likelihood that Senate Democrats will support broader crypto legislation. But if Comptroller Gould refuses to approve the application, or significantly delays it, he risks angering a President who has a direct financial stake in World Liberty’s success. Because the Comptroller serves without meaningful removal protections, the President could simply dismiss Gould for blocking or slowing the application.
Trump’s recent executive order makes that pressure more explicit. By directing regulators to streamline charter applications for fintech firms and instructing the Federal Reserve to reevaluate payment account access for uninsured and nonbank digital asset firms, the White House effectively placed its thumb on the scale. The order strongly suggests that the administration supports not only national trust charters for crypto firms, but also eventual access to Federal Reserve payment infrastructure once those firms are chartered. The World Liberty application has therefore become a test of whether the federal bank chartering process can remain genuinely independent when the President has a direct financial stake in the applicant’s success.
Financial Stability: The Bailout Is Already Baked In
The Trump administration’s efforts to integrate crypto into the traditional financial system creates risks that the earlier generation of crypto failures did not. FTX was devastating for customers and counterparties, but its collapse did not trigger a broader financial crisis because crypto was still only weakly connected to the traditional banking system. That was not an accident. During the Biden administration, federal banking agencies took a skeptical approach to bank involvement in crypto activities and required supervised institutions to notify regulators before engaging in such activities.
The Trump administration is reversing that approach. National trust charters, Federal Reserve payment accounts, stablecoin reserve management, and tokenized settlement infrastructure all serve the same objective: pulling crypto into the core of the financial system.
Stablecoins are arguably the most dangerous channel because they are designed to function like money while remaining structurally different from bank deposits. The Bank for International Settlements has warned that stablecoins perform poorly against the core tests of sound money: singleness, elasticity, and integrity. They lack settlement in central bank money, are constrained by cash-in-advance reserve models, often circulate on public blockchains with substantial illicit finance risks, and can trade at varying exchange rates when confidence weakens.
The experience of USDC during the failure of Silicon Valley Bank shows how quickly stablecoin risks can become public risks. Circle held $3.3 billion in uninsured deposits at SVB. When SVB failed, USDC broke the buck and fell as low as approximately 87 cents before recovering after federal regulators invoked the systemic risk exception and guaranteed all uninsured deposits at SVB. That intervention effectively protected Circle’s reserves. Although the bailout was formally a bailout of uninsured bank depositors, its practical effect was to rescue one of the world’s largest stablecoins.
That episode should have been a warning. Instead, the OCC is helping build a system in which future stablecoin bailouts become more likely.
Professor Wilmarth has argued that a major stablecoin issuer’s failure would put federal regulators under overwhelming pressure to intervene. Stablecoins promise par redemption. If a large issuer cannot meet redemptions, holders will run not only from that issuer but potentially from other stablecoins as well. Because stablecoin reserves are concentrated in Treasury bills, repos, money market funds, and uninsured bank deposits, forced liquidation during a run could transmit stress into short-term funding markets and the banking system. The larger stablecoins become, the more regulators will feel compelled to prevent failure in the name of financial stability.
The OCC’s proposed GENIUS Act implementation makes this problem worse by allowing federally qualified stablecoin issuers to operate with limited capital. Currently, uninsured national trust banks are subject to generally applicable capital requirements under Part 3 of the OCC’s regulations, including the risk-based and leverage capital requirements that apply to member banks and insured depository institutions. The OCC’s GENIUS Act proposal, however, would permit any uninsured national trust bank, whether or not it is a permitted payment stablecoin issuer, to opt out of that generally applicable framework and instead elect individualized OCC-determined capital requirements designed for OCC-supervised stablecoin issuers.
This is a dangerous move. It would allow institutions engaged in novel, operationally complex, and potentially systemic activities to operate under bespoke capital requirements rather than standardized bank capital rules. Circle’s conditional trust bank approval requires only $6.05 million in minimum Tier 1 capital, reflecting the OCC’s view that a limited-purpose trust bank that does not take deposits or make loans has a narrow risk profile. But a stablecoin issuer managing tens of billions of dollars in reserves and promising par redemption at scale is not a narrow-risk institution merely because it does not make loans.
Self-custody of reserves compounds the problem. By allowing stablecoin issuers to become national trust banks, the OCC would enable issuers to custody and manage their own reserves. BPI, the Consumer Bankers Association, and the Financial Services Forum warned that when a stablecoin issuer simultaneously serves as issuer and custodian of reserve assets, there is no independent third-party custodian maintaining a clear distinction between reserve assets and proprietary assets. That creates greater risk of self-dealing. The OCC itself has acknowledged that operating a custody business generates a separate set of risks from operating a stablecoin business, and that the combined model may be riskier than either activity conducted separately.
Resolution is another serious weakness. The OCC has not acted as receiver for a failed national bank since the creation of the FDIC in 1933. Its receivership regulations for uninsured national banks rely on antiquated statutory provisions that lack the flexibility and powers Congress gave the FDIC to resolve complex insured institutions. This matters because uninsured national trust banks engaged in stablecoin issuance would be novel institutions with large-scale payment obligations, reserve portfolios, operational dependencies, and crypto-market linkages. The OCC has no modern experience resolving anything like that.
The GENIUS Act does not solve the problem. It says failed stablecoin issuers will be handled through bankruptcy, but the interaction between bankruptcy, OCC receivership, FDIC resolution, and state trust company resolution remains unclear. Banking groups have warned that a messy resolution of even a small stablecoin issuer could cause disproportionate damage if holders of other stablecoins panic and run. That risk is magnified when the failed issuer is federally chartered or politically connected.
Professor Adam Levitin has identified another flaw in the GENIUS Act’s bankruptcy provisions: stablecoin holders may not have the clean first-priority claim the statute’s supporters imply. The Act attempts to give holders priority for the issuer’s reserves, but bankruptcy law is notoriously formal and priority schemes interact with administrative expenses, secured claims, property-of-the-estate rules, custodial arrangements, and competing creditor claims. If holders discover during a failure that their supposed priority is uncertain, delayed, or subordinated to the practical needs of administering the estate, the result will be panic, litigation, and a stronger case for ad hoc government intervention. As Professor Levitin notes, a legal framework that appears to promise orderly resolution but cannot actually deliver rapid par redemption during stress will only accelerate a run on stablecoins.
The Real Economy Pays the Price
The stablecoin trust charter push also threatens traditional credit intermediation. If stablecoins become widely used as payment instruments and stores of value, especially if exchanges or affiliates can provide rewards or other economic benefits to holders, deposits will migrate from banks to stablecoins. Banks fund loans with deposits. Stablecoin issuers largely hold reserves in cash, Treasury bills, repos, and money market funds. A large migration from bank deposits to stablecoins would therefore reduce the banking system’s lending capacity and raise borrowing costs for households, small businesses, farms, and communities.
The OCC’s trust charter policy makes this problem worse because it gives stablecoin issuers the prestige of a federal bank charter while allowing them to operate without the public obligations imposed on banks. A stablecoin issuer with a national trust charter can present itself as federally regulated, compete directly with bank deposits as a payment and cash-management instrument, and yet avoid the CRA, consolidated supervision, full prudential standards, and many of the other obligations attached to bank charters.
What Comes Next
All of this raises the question of what should happen if a Democrat is sworn in as President on January 20, 2029.
The history of financial regulation shows how difficult it is to put the toothpaste back in the tube. Once firms receive charters, build business models around them, attract customers, integrate into payment systems, and cultivate political constituencies, regulators become increasingly reluctant to reverse course. The Biden administration, for example, did not revoke Anchorage’s national trust charter even as federal banking regulators adopted a far more skeptical posture toward crypto-asset activities and the OCC identified significant deficiencies in Anchorage’s anti-money laundering compliance program, resulting in a 2022 consent order that remained in place until it was terminated in August 2025.
But legality must come first.
If recent national trust charters were granted to crypto firms in clear violation of federal law, a future administration should revoke them. That would not be radical. It would be faithful to the National Bank Act. Congress did not authorize the OCC to create a new class of uninsured crypto banks that combine the benefits of federal chartering with the risks of lightly regulated stablecoin issuance and crypto-market infrastructure.
Revocation would also be sound public policy. Crypto remains a highly volatile asset class prone to repeated boom-and-bust cycles. So far, those cycles have produced limited damage to the broader financial system largely because the connections between crypto markets and the banking system remained relatively contained. That is now changing rapidly. The Trump administration is actively integrating crypto into core components of the financial system, including bank chartering, capital markets, and payment infrastructure.
The irony is striking. Satoshi Nakamoto originally envisioned Bitcoin as a peer-to-peer payment system operating outside traditional finance and government support mechanisms. The very first Bitcoin block famously embedded a reference to a Times of London headline reading: “Chancellor on Brink of Second Bailout for Banks.” Yet the OCC’s current approach risks recreating precisely the dynamic crypto was supposedly designed to escape. Only this time, the institution at the center of the rescue may be a federally chartered stablecoin issuer.
The next FTX will not remain isolated if its collapse is transmitted through a federally chartered trust bank, a major stablecoin issuer, a Federal Reserve payment account, or a Treasury-backed reserve portfolio. At that point, it becomes not merely a crypto failure, but a financial stability event.
The OCC’s crypto trust charter experiment is legally dubious, economically dangerous, and fundamentally inconsistent with the structure of U.S. banking law. It should be stopped before the federal government is forced to rescue the very system it is now helping to build.
Lee Reiners is a lecturing fellow at Duke University
