A bank charter should come with a bank's obligations
The trust charter was built for custodians. It should not become federal standing for payment companies without deposit insurance, capital rules or community duties.
A national bank charter is among the most valuable licences in American finance. It lets a company operate across the country under one federal regulator, and it pushes a good deal of state law aside along the way. In exchange, ordinary banks accept capital and liquidity rules, consolidated supervision, deposit insurance and, for insured banks, a duty under the Community Reinvestment Act to serve the places they take deposits from.
The trust charter was a narrow exception to that bargain: a federal home for firms that hold other people's assets as fiduciaries. The Office of the Comptroller of the Currency has now stretched it. Its March rule, built on a 2021 interpretive letter, says trust banks may carry on non-fiduciary business as well. By the count in the complaint community bankers filed on 2 October, 21 trust banks have been approved or conditionally approved under this administration, at least 13 of them crypto companies.
Look at what the applicants want to do. Rain's application, announced on 5 October, asks for a trust bank that would hold assets in custody, manage reserves for other stablecoin issuers and issue dollar stablecoins of its own. Holding assets for someone is trust business. Issuing a dollar token that people pay each other with looks a great deal like taking money and promising it back.
The applicants say they will take no deposits and make no loans, and many of them mean it. But a charter is a door, not a business plan. Once it is open it brings nationwide reach and the credibility of a federal bank name, with no FDIC insurance behind the customer. The community bankers say the OCC has not handled the receivership of an uninsured bank in nearly a century. That is not something to learn during a failure.
None of this means crypto firms should be shut out. The GENIUS Act already gives stablecoin issuers a regulated path, and a firm that wants to do banking can apply for a full bank charter and accept everything that comes with it. What should not exist is an entrance where the name and the reach come with the licence and the obligations are left outside.