Executive summary
- Crypto companies continue to seek charters from national banks and state trusts for access to payment pathways, oversight clarity, and institutional credibility; Regulators remain cautious, however, due to unresolved concerns around liquidity risk, operational resilience and the suitability of digital asset activities to prudential frameworks.
- State trust charters have emerged as the most feasible entry point, but they raise questions about consistency of oversight, regulatory arbitrage, and when trust charter activities become functionally equivalent to those of the banking industry and therefore warrant federal oversight.
- The prolonged exchanges between candidates and regulators reflect broader political tensions – innovation versus security and robustness – and will ultimately determine how and whether digital asset business models can be responsibly integrated into the U.S. banking system.
Introduction
As market, regulatory, and public dynamics continue to evolve, crypto companies are continuing their efforts to more formally integrate into the U.S. banking system. Crypto companies have found that approving state charters will likely be the most feasible entry point. Significant concerns remain, however, regarding oversight consistency, regulatory arbitrage, and when fiduciary charter activities will become functionally equivalent to banking activities, warranting federal oversight.
As crypto companies engage in the charter application process, the back-and-forth with regulators shows a broader tension between innovation and institutional security and soundness. How this tension is resolved will determine how – or if – digital asset business models can be integrated into the banking system. While none of these initiatives have yet redefined the financial regulatory landscape, the industry’s persistence underscores a deeper policy challenge: how to integrate new financial technologies into a system designed around balance sheets, liquidity risk, and traditional payments infrastructure.
The political problem
Crypto companies’ interest in banking and fiduciary charters is not merely symbolic. Full-service charters provide clearer oversight expectations and access to payment pathways, while trust charters provide a more accessible regulatory framework for custody and settlement activities. Regulators remain suspicious. Activities related to digital assets present operational, market and liquidity risks that do not clearly correspond to existing prudential frameworks. This mismatch has resulted in a series of slow, heavily negotiated requests in which agencies request increasingly granular information on governance, risk modeling, and compliance functions.
The resulting dynamic – the industry’s insistence on clarity rather than prudence in regulation – has produced a protracted and often opaque chartering process that has implications for market structure, consumer protection and competitive neutrality.
Regulatory landscape and monitoring constraints
To date, charter activity falls into three main categories:
National Bank charter applications
Some crypto companies have sought national trust or full-service charters as a way to gain access to federal oversight and, ultimately, the Federal Reserve Payments System. These requests tend to stall on issues of operational resilience, segregation of retained assets and ability to manage liquidity in crisis situations. Regulators are particularly sensitive to the prospect of maturity transformation at institutions whose core assets may exhibit extreme volatility.
State trust charters as a parallel path
State-level trust charters, particularly in jurisdictions with specific digital asset frameworks, provide a more accessible path forward. They allow companies to provide custody, clearing and settlement without full banking authorization. Yet these charters raise questions about the consistency of oversight and the potential for regulatory arbitrage. As these entities attempt to expand their services, federal agencies must evaluate whether their activities approach the functional limits of the banking industry.
Thematic charters and limits of innovation policy
The debate over special purpose charters continues to reflect broader tensions around regulatory modernization. While industry advocates tout them as drivers of innovation, federal agencies have taken a narrower view, emphasizing statutory limits and the risk of creating institutions with federal privileges without meeting prudential obligations.
The existence of these distinct paths to banking should not imply that crypto companies have had any success. Although applications have skyrocketed, the number of successful applications in all categories remains extremely low. Anchorage Digital became the first crypto entity to receive a charter of the national bank in 2021; it remains the only crypto company to have done so.
Industry Motivations: Access, Credibility, and Scale
For crypto companies, the logic of pursuing charters remains compelling. Direct integration into the Federal Reserve’s infrastructure would reduce reliance on third-party banks and mitigate counterparty risk. A charter – federal or state – provides a more predictable oversight environment than a money transfer license scattered across multiple states. But perhaps the main attractions lie in credibility and scale: institutional clients increasingly demand bank-level governance, risk management and operational controls; For stablecoin issuers in particular, a banking framework provides a pathway to scale issuance while satisfying evolving regulatory expectations.
These incentives explain why companies continue to refine and resubmit their applications even after encountering significant oversight friction.
Implications for market structure
The continued push for charters speaks to the growing pressure to integrate crypto infrastructure into the existing financial system. But it also highlights the structural obstacles that stand in the way of this integration. Divergent state and federal approaches create uncertainty for both businesses and policymakers. Traditional banks say crypto companies are seeking access to banking privileges without taking on the full burden of prudential regulation. But the main concern of regulators remains systemic risk. Premature or insufficiently supervised integration of digital asset activities could introduce new vulnerabilities in critical financial market infrastructures.
Conclusion
The dream is simple: carry out banking-like activities with limited supervision, regulation or capital requirements. Crypto companies’ efforts to secure banking and fiduciary charters represent a persistent strategic attempt to bridge the gap between digital asset innovation and traditional banking regulation. Even if regulators remain cautious, industry demand for clearer oversight procedures is unlikely to diminish. The outcome of this extended engagement will shape not only the digital asset services market, but also the broader evolution of the U.S. regulatory framework as it confronts technologies that challenge long-standing definitions of banking, trust services, and financial intermediation.
