The U.S. OCC gives the green light! Five crypto giants including Ripple, BitGo, and Circle received “conditional approval” for trust bank licenses

The U.S. Office of the Comptroller of the Currency (OCC) has conditionally approved the national trust bank license applications of five cryptocurrency-related institutions, Ripple, BitGo, Fidelity Digital Assets, Paxos and Circle.
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Contents of this article

The U.S. Office of the Comptroller of the Currency (OCC) has currently conditionally approved National trust bank license applications for five cryptocurrency-related institutions, Ripple, BitGo, Fidelity Digital Assets, Paxos and Circle. This decision marks the OCC’s further open attitude under the digital asset regulatory framework, reflects the continued friendly changes in the U.S. regulatory environment towards the encryption industry, and will help crypto companies integrate more deeply into the traditional financial system.

Among them, Circle's First National Digital Currency Bank and Ripple's Ripple National Trust Bank are two newly approved ones, while BitGo Bank & Trust, Fidelity Digital Assets, and Paxos Trust Company are conditionally approved by the OCC to convert from state trust companies to national trust banks.

What does "conditional approval" mean?

"Conditional approval" is the preliminary stage of OCC approval of licenses. After reviewing the application, the OCC can grant this approval if it determines that the company generally meets requirements such as capital adequacy, risk management framework, and business plan. This is not a final permission, however, and companies are required to complete certain conditions within a specified period (usually 6 to 12 months), such as strengthening compliance systems, 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 officially operate.

Permissions of the license

After obtaining the final license, these institutions will transform into federally regulated trust banks. Their core powers include:

First, manage customer assets as a fiduciary, which can safely custody digital assets, such as stable currency reserves. This will significantly increase the confidence of institutional investors and attract more pension funds or corporate clients to participate in the crypto market.

Secondly, it can provide payment settlement services and support cross-border payment and settlement based on blockchain, which will potentially reduce transaction costs by 30% to 50%.

In addition, these trust banks can apply for the main account of the Federal Reserve System, directly connect to traditional payment systems such as Fedwire or CHIPS, accelerate the flow of funds, and further bridge encryption and traditional finance.

However, it is worth noting that this license also has clear restrictions: unlike full-functional commercial banks, trust banks are not allowed to accept deposits or issue loans, and their business scope is limited to custody and fiduciary activities. At the same time, it is still necessary to comply with the OCC's digital asset guiding principles, such as asset segregation storage and risk disclosure requirements.

Profound positive impacts

This approval is expected to bring a number of positive impacts. First, for these institutions, they can immediately expand their core business, which is expected to promote the growth of the market value of related stablecoins and attract more institutional funds to flow into the encryption field. Secondly, for the overall industry, this symbolizes the deep integration of encryption and traditional finance, which is expected to stimulate the development of "DeFi 2.0", combining decentralized finance with regulated custody to reduce systemic risks. In the long term, with the support of the "crypto-friendly" policies of the United States, this move may drive the total market value of crypto assets to increase, encourage more companies to apply for similar licenses, and further promote the integration of the two major financial systems.