More Bank Charters, More Clarity

The OCC has granted conditional approval for five national trust bank (NTB) charters for institutions that will focus on innovative digital asset products and services. The approvals come at the end of the first year of the second Trump administration, as a wave of applicants seek the NTB charter for its federal preemption benefits and broad powers, and in anticipation of future GENIUS Act compliance. We expect OCC approvals for NTBs to continue and more applicants to pursue the strategy.

Before the approvals were granted, the OCC also clarified that various riskless principal transactions involving digital assets are permissible. National banks and federal branches of foreign banks may immediately rely on the clarification. Banks chartered by states that have wildcard statutes might also be able to leverage the interpretation.

Key Takeaways

• The OCC has demonstrated its credibility. In approving a handful of NTB applications, the OCC has shown the digital asset market that it is serious, and will charter new entities or convert existing institutions—despite staff reductions and an ambitious agenda on other fronts (e.g., capital reform, supervisory reforms).
• Structural choices suggest nuanced approaches. The approvals demonstrate various paths forward. For instance, some entities are converting state-chartered trust companies to NTBs, while others are chartering new NTBs to provide services to their state-chartered trust companies, which they will retain. This dual-structure option revisits some of the regulatory structures more common in the early 2000s when OCC regulated-entities were commonly affiliated with state-regulated entities. Regulator choices, at least for some, may not focus on streamlining in favor of flexibility over product and services offerings. For other applicants, a very basic and clean structure may be ideal.
• Timing considerations still matter. The OCC aims to have a decision on these conditional approvals 120 days from the date the application is formally "accepted"—not necessarily merely submitted. Some of these applications took longer. But the fact that the OCC did this ahead of the close of the calendar year is refreshing. If the OCC had slipped into 2026, it may have raised questions about whether the OCC could keep pace and limit additional applicants.
• Capital clarity and future possibilities. The conditional approvals detail the capital and liquidity requirements. A key insight is that tier 1 capital ranges from $6 million to $25 million. The higher end was for a particularly established and larger institution.
  • Given the size of the institutions involved (including their parent companies), the tier 1 capital range does not strike us as unreasonable when compared to national bank capital requirements, even those for community banks.
  • In addition, the OCC has specified that essentially 50% of the tier 1 capital must be held in "Eligible Liquid Assets"—these are unencumbered cash, insured deposits with a maturity of 90 days or less, U.S. government obligations maturing within 90 days or less, and other assets for which the OCC provides its written nonobjection.
    • It will be particularly interesting to monitor whether the door has been opened for digital/tokenized assets to be deemed "eligible."
  • Existing OCC guidance expects NTB applicants to possess 180 days of liquidity This is reaffirmed in the conditional approvals.
• OCC approach is still measured. The issuance of five conditional approvals is notable because of the relative dearth that preceded them. That said, there are other pending applicants and many prospective ones. The OCC is a sophisticated regulator and is proceeding in an orderly and principled fashion.
  • The OCC is still moderating its approach and not merely rubberstamping submissions. Applicants should note that even for credible applications and existing institutions, some remediation and additional guardrails may be required upon conversion to a NTB charter.
• More approvals to come. Assuming the OCC continues in this way, we expect the next wave of approvals to follow in early 2026. It would be particularly impressive if the OCC approves any more before year end 2025, but also highly unlikely based on past practice.
• GENIUS Act rules implementation. The FDIC has announced its proposed rules; the OCC, Federal Reserve, and NCUA proposed rules are expected to follow soon. We currently expect that barring any serious regulatory or supervisory scrutiny at an individual institution, insured depository institutions and federal credit unions that want to set up GENIUS Act compliant subsidiaries will have their applications processed expeditiously.
• IL 1188 clarifies national bank powers for riskless principal activities. The OCC also clarified in a new interpretive letter that various riskless principal activities are permissible for national banks, including NTBs, either as a bank power or as incidental to it. The clarification is helpful but not surprising, given that the OCC has reiterated in recent interpretations that many other incidental powers should or do apply to digital asset activities and that the OCC takes a tech-neutral approach.
  • In these cases, the OCC is focused on economic substance, not labels. The intermediary in a riskless principal transaction conducts itself as the legal and economic equivalent of a broker acting as agent. At a very high level, the NTB offsets buy/sell orders, there is immediate resale, and no inventory held beyond settlement mechanics:
    • Intermediary purchases an asset from one counterparty for immediate resale to a second counterparty, the ultimate purchaser of the asset.
    • The intermediary's purchase of the asset from the initial counterparty is conditioned on an offsetting order from the second counterparty to purchase the same asset from the intermediary.
    • Execution of the offsetting purchase and sale occurs effectively simultaneously.
    • The intermediary does not hold any assets in inventory in connection with a riskless principal.
  • National banks have long acted as principal in relation to their customers' derivatives transactions.
  • For NTBs, like other national banks, that want to avoid proprietary dealing or balance-sheet risk inconsistent with a limited-purpose charter, riskless principal activity:
    • Intermediates customer transactions without market risk
    • Avoids inventory and directional exposure
    • Looks economically like agency brokerage, which the OCC has long treated as within the business of banking
    • Aligns with custody-centric and fiduciary narratives common to NTB charters.

Our Take

The OCC's actions on digital assets and chartering continue to signal to the market, that now is a good time to enter the U.S. banking market via federal bank charter options. These latest developments are particularly helpful for de novo applicants and those seeking conversion of existing institutions.

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DWT's banking and payments practice is a multidisciplinary team of subject matter experts in financial services, privacy, data security, technology transactions, enforcement and litigation, and other relevant areas. The B&P team regularly advises financial institutions on compliance with applicable federal and state banking laws and related requirements. For more information or assistance, please contact authors Max Bonici, Stephen T. Gannon, Melissa Baal Guidorizzi, Elizabeth Lan Davis, or your usual DWT contact.