Payward, the corporate entity behind the cryptocurrency exchange Kraken, has submitted an application to the Office of the Comptroller of the Currency (OCC) for a national trust company charter. This strategic move aims to establish the Payward National Trust Company (PNTC), which is intended to provide institutional and individual clients with regulated, bank-grade custody and trust services specifically for digital assets.
Key Takeaways
- Payward, Kraken’s parent company, is seeking a national trust company charter through the OCC.
- The proposed entity, Payward National Trust Company (PNTC), will focus on regulated custody and trust services for digital assets.
- This application follows similar moves by Coinbase and Ripple, which have also pursued national trust charters.
- The move signifies a broader trend of crypto firms seeking regulatory clarity and traditional financial infrastructure.
- Concerns have been raised by traditional banking groups regarding the OCC’s approach to granting such charters to fintech and crypto firms.
The establishment of PNTC is designed to leverage Payward’s existing operational infrastructure, risk management protocols, compliance frameworks, and its network of regulated affiliates to ensure secure and compliant service delivery. This initiative mirrors recent actions by other major players in the digital asset space, including Coinbase, which received conditional approval for its national trust company charter approximately one month prior. Ripple has also secured conditional approval for a similar charter.
Arjun Sethi, co-CEO of Payward and Kraken, emphasized the company’s long-standing commitment to a regulatory-driven path for digital assets. He stated that a national trust company charter offers the certainty that institutional investors require and is instrumental in building the necessary infrastructure for the next generation of digital asset custody solutions.
The OCC’s willingness to grant national trust bank charters to cryptocurrency and fintech companies has been a subject of contention. Previously, a prominent trade group representing major U.S. banks, including JPMorgan Chase, Goldman Sachs, and Bank of America, reportedly considered legal action against the OCC. The group’s concerns centered on allegations that the OCC was not adequately heeding warnings regarding its perceived reinterpretation of federal licensing rules for financial institutions.
Potential Regulatory Precedent
Payward’s application for a national trust charter with the OCC, alongside similar applications from Coinbase and Ripple, represents a significant development in the ongoing effort to integrate digital asset services within the traditional financial regulatory framework. If granted, these charters could establish a precedent for how digital asset custodians and service providers are regulated at the federal level in the United States. This approach allows these entities to operate under a banking charter, offering a level of perceived stability and compliance that may appeal to institutional investors and sophisticated clients seeking to engage with digital assets. It also brings these operations under direct federal banking supervision, potentially creating a more standardized and predictable regulatory environment compared to the patchwork of state-by-state regulations. The OCC’s decisions in these matters will likely influence the regulatory landscape not only for crypto firms but also for the broader evolution of financial services, particularly as traditional financial institutions also explore digital asset offerings.
Based on materials from : www.theblock.co