Key insight: ICBA says Bridge’s stablecoin plan violates historic scope of the trust charter.
Supporting data: The industry group cites deposit-like business plans and the lack of statutory fiat to expand trust charters through an interpretive letter written by Gould in 2021.
Forward look: Crypto trust bids face growing calls from banks, with increasing focus on administrative and legal concerns.
A banking trade group wrote to the Office of the Comptroller of the Currency Thursday opposing fintech company Bridge’s application for a national trust charter, citing administrative-procedural and statutory issues. Bridge is the stablecoin-focused arm of Stripe.
In a letter to the OCC’s top chartering officer Stephen Lybarger, the Independent Community Bankers of America asked the agency to reject the application after statements in the applicant’s proposed business model proposed “carrying on the business of banking,” which ICBA says exceeds the national trust charter’s scope without commensurate oversight.
“[The charter] was narrowly intended to allow trust banks to facilitate the provision of traditional fiduciary services including personal trust and estate administration, retirement plan services, investment management and advisory activities, and corporate trust administration,” Mickey Marshall, ICBA’s Vice President and Regulatory Counsel wrote. “By offering stablecoins to consumers, Bridge is attempting to offer a product that is a functional substitute for demand deposits without becoming subject to the laws and regulations that bind other banks, including the Bank Holding Company Act.”
Bridge, which was acquired for just over a billion dollars by Stripe in February,
In July, the American Bankers Association
Trust companies should be limited to their historically niche fiduciary functions like estate management, which, “do not compete with commercial banks because they neither extend credit nor accept deposits from the general public,” ICBA wrote.
but the OCC began exploring special-purpose charters in 2016 and, under then-Acting Comptroller Brian Brooks in 2020, examined the legal and practical groundwork for a proposed “payments charter.” Though that initiative never launched, the exploration laid the foundation for the agency’s Letter
ICBA suggests that there are also administrative procedural issues at hand, arguing the OCC cannot expand those powers through an interpretive letter without formal rulemaking.
“This significant policy change was made without any direction from Congress and without
amendment to the National Bank Act,” Marshall argues. “There is nothing in the existing statute to indicate that Congress intended for national trust banks to offer non-fiduciary services.”
According to ICBA, applicants proposing to offer stablecoins on demand likely do not satisfy the exemption, in the Bank Holding Company Act that allows solely trust and fiduciary firms exemption from official “bank” status and commensurate regulatory requirements.
Amidst the wave of applications, ICBA says Bridge and similar applicants are engaging in “regulatory arbitrage” by avoiding traditional bank charter requirements and putting customers at risk. ICBA also said it worries the OCC lacks the experience and infrastructure to resolve a large, uninsured, crypto-focused institution in a crisis.
“As an uninsured national trust bank, Bridge will hold stablecoin reserves—primarily short-term Treasuries—and provide digital asset custody at potentially enormous scale,” the ICBA wrote. “The OCC has not managed a receivership for an uninsured national bank since the 1930s, and its rules are tailored to traditional trust companies with segregated securities—not to a stablecoin issuer deeply embedded in volatile crypto markets and intricate blockchain systems.