Fintech and Crypto Bank Charter Applications Rise Driven Partly by OCC Interpretive Letter

That letter formalized the OCC’s interpretation that national trust banks can engage in activities that are non-fiduciary in nature, including non-fiduciary custody.

"That letter was important and is now probably more important than it was for several years because of the change in leadership and approach at the OCC," said Brian Montgomery, a partner at Pillsbury Winthrop Shaw Pittman and former New York bank regulator, in an interview with American Banker. "That goes beyond what might fall into the bucket of solely focusing on providing fiduciary service, and led to the interpretation that's been carried out now that allows national trust banks to do more than just provide a fiduciary service, and custody is a really important piece of that.”

Traditional banks have made their concerns known, sending letters to the agency asking them to pause consideration of charters until the scope of the charter is settled. Those banks are understandably concerned that trust banks may be engaging in the business of banking without comparable obligations, Montgomery said.

"Think from a bank's perspective, if you're an insured depository institution, there are a lot more regulatory requirements than there may be for certain of these trust banks," he said. "Whether that's through the Community Reinvestment Act, for example, getting deposit insurance … there's a view — I think I can understand this from a bank's perspective — that some of these banks that are being chartered may be doing things similar to what a bank would do, but without all of the same regulatory requirements."

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