The Office of the Comptroller of the Currency said it will continue pressing to revive de novo bank chartering, a push that the agency says is reopening a federal path for some of the biggest names in crypto.
In a statement issued Tuesday, the regulator said reinvigorating new bank formation remains a priority. It also praised the Federal Deposit Insurance Corporation for its recent work on the issue, saying the FDIC’s updated process for reviewing deposit insurance applications fits with the OCC’s effort to reverse the drop in new charters.
Comptroller of the Currency Jonathan V. Gould said de novo chartering is a sign of a healthy banking system. He added that, for more than a decade, regulators had effectively signaled that applicants seeking a federal bank charter and federal deposit insurance should not expect a path forward.
Gould said entities engaged in legally permissible activities, including those tied to digital assets and other new technologies, should have a path to becoming a national bank. “America and the OCC are once again open for business,” he said.
Applications rise after years of decline
According to the OCC, de novo chartering dropped sharply over the past 15 years. From 2011 through 2014, the agency received an average of fewer than four charter applications per year, and in some years it received none.
The agency said the direction has now changed. Over the last 18 months, the OCC has received 40 de novo applications, including filings for national trust banks, a charter type it said it has granted for decades.
In many cases, the OCC said, it has ruled within 120 days after receiving a complete application.
Crypto firms are among the applicants
For the first time in five years, a full-service national bank has received final approval and opened: Erebor Bank, N.A. The bank is backed by Palmer Luckey, Joe Lonsdale and Peter Thiel’s Founders Fund.
Several major crypto companies have received conditional approval, including Ripple, Circle, Crypto.com and Paxos.
World Liberty Financial, the decentralized finance platform backed by Donald Trump, has also applied. It is seeking to bring institutions into the use of its native stablecoin, USD1.
The appeal of the charter is structural. It would allow crypto companies to hold client assets and process trade settlement inside a federally regulated framework.
For Coinbase, whose application is still under review, approval would mean operating as a crypto custodian on a federal basis and managing assets for larger institutions.
Banking groups object to the review pace and risk profile
Not everyone supports the shift. In December, the Independent Community Bankers of America urged the OCC to reject Coinbase’s application for a national trust bank charter. The group argued that the exchange has “demonstrably flawed risk and control functions” and operates under governance that prevents independent oversight.
In February, the American Bankers Association, the largest banking lobby in the United States, also urged the OCC to slow its review of crypto company charter applications.
The report said the procedural objections sit on top of a broader turf battle between traditional banks and crypto firms. One of the main points of dispute is stablecoins. Companies such as Coinbase want to reward users for holding the tokens, while banks argue that the practice is unfair and could erode their deposit base.
OCC says it will keep encouraging new bank formation
For its part, the OCC said it will continue encouraging the formation of new banks and work to strengthen the resilience of the federal banking system.
The story first appeared in Bitcoin Magazine and was written by Mathew Di Salvo.