BPI Calls for Guardrails on OCC Digital-Asset Charter Approvals

The Bank Policy Institute ("BPI") warned that the Comptroller of the Currency's ("OCC’s") consideration of an application for a digital-asset trust bank may exceed the agency's statutory authority and extend the national trust charter beyond activities permitted under federal banking law.

1. Establish a clear paradigm and protect banking–commerce separation. The BPI urged the OCC to develop a public framework, similar to the FDIC’s industrial loan company process, before granting charters to entities affiliated with commercial firms. The association called for a "rebuttable presumption of control" for nonfinancial parents and for the release of sufficient application details to allow meaningful public review.
2. Limit national trust charters to bona fide fiduciary activities. The BPI argued that proposed digital-asset and custody services often fail to meet the statutory requirement to be primarily engaged in fiduciary activities under the National Bank Act and OCC rules. The association emphasized that "non-discretionary custody" and asset-servicing functions "are not fiduciary in nature" and therefore should not qualify a firm for a national trust charter.
3. Address charter scope, volatility, and systemic-risk channels. The BPI warned that trust banks concentrated in crypto and stablecoin markets face significant liquidity and solvency risk from asset price swings. The association noted that unchecked stablecoin growth could either displace insured deposits or amplify run risk, undermining financial stability and credit availability.
4. Clarify deposit-taking implications of stablecoin activity. The BPI urged the OCC to determine whether stablecoin issuance or reserve management constitutes deposit-taking under the Federal Deposit Insurance Act. The association recommended prohibiting trust banks from commingling or directly holding stablecoin reserves and requiring any cash backing to be maintained at insured depositories with 1:1 capital support.
5. Strengthen supervision, capital, liquidity, and resolution planning. The BPI called for heightened prudential standards, contingency planning for digital-asset stress scenarios, and examiner training tailored to these novel risks. The association also urged the OCC to coordinate with the Federal Reserve on consolidated supervision and to require advance resolution planning.
6. Enforce affiliate-transaction safeguards. The BPI emphasized that the OCC must strictly apply Federal Reserve Act Sections 23A and 23B ("Reg. W: Transactions between Member Banks and Their Affiliates") to all dealings with affiliates to prevent undue risk transfer. The association identified custody fees, deposit placements, and credit arrangements as key areas requiring close monitoring and potential mitigation.
7. Ensure securities-law compliance for any trading or brokerage activities. The BPI asked the OCC to evaluate whether digital-asset trading or securities-related activities would require SEC registration. The association stated that institutions not engaged in substantial fiduciary functions may not qualify for Regulation R ("Exceptions for Banks from the Definition of Broker") exemptions and should comply fully with broker-dealer registration requirements.