The U.S. Office of the Comptroller of the Currency (OCC) hasconditionally approved the national trust banking license applications of five cryptocurrency-related entities: Ripple, BitGo, Digital Assets, Paxos, and Circle. This decision signifies a further opening of the OCC's digital asset regulatory framework and reflects the continued positive shift in the U.S. regulatory environment towards the crypto industry, facilitating deeper integration of crypto companies into the traditional financial system.
What does "conditional approval" mean?
"Conditional approval" is the initial stage of the OCC's license approval process. After reviewing the application, the OCC may grant this approval if it deems the company substantially compliant with requirements such as capital adequacy, risk management framework, and business plan. However, this is not final permission. The company must fulfill specific conditions within a specified period (usually 6 to 12 months), such as strengthening its compliance system, replenishing capital, or passing stress tests. Once all conditions are met, the OCC will issue an unconditional national trust bank license, and the company can then officially commence operations.
License authority
Once they receive their final licenses, these institutions will transform into federally regulated trust banks, whose core powers include:
First, acting as a fiduciary to manage client assets allows for the secure custody of digital assets, such as stablecoin reserves. This will significantly boost institutional investor confidence and attract more pension funds or corporate clients to participate in the crypto market.
Secondly, it can provide payment and settlement services, supporting blockchain-based cross-border payments and clearing, which could potentially reduce transaction costs by 30% to 50%.
In addition, these trust banks can apply for master accounts in the Federal Reserve System, directly access traditional payment systems such as Fedwire or CHIPS, accelerate the flow of funds, and further bridge crypto and traditional finance.
However, it is worth noting that this license also has clear limitations: unlike full-service commercial banks, trust banks are not allowed to accept deposits or issue loans; their business scope is limited to custody and trustee activities. At the same time, they must still comply with the OCC's digital asset guidelines, such as asset segregation and risk disclosure requirements.
Profound positive impact
This approval is expected to have several positive impacts. First, for these institutions, it allows for immediate expansion of their core businesses, which is expected to drive the market capitalization of related stablecoins and attract more institutional funds into the crypto space. Second, for the industry as a whole, this symbolizes a deep integration of crypto and traditional finance, potentially stimulating the development of "DeFi 2.0," combining decentralized finance with regulated custody to reduce systemic risk. In the long term, with the support of the US's "crypto-friendly" policies, this move may drive up the total market capitalization of crypto assets and encourage more companies to apply for similar licenses, further promoting the integration of the two financial systems.
