Invest1 publisher3 min readPublished
Block applies for OCC trust bank charter, joining 22 other digital-asset applicants
Builders Bank & Trust would custody bitcoin and stablecoins under one federal supervisor instead of fifty state ones. That is worth paying for. But 23 of the OCC's last 40 applications want much the same thing.
The Investor · Invest desk
What happened
- Block applied to the Office of the Comptroller of the Currency on Tuesday to establish Builders Bank & Trust, an uninsured national trust bank that would custody bitcoin and stablecoins.
- The OCC has received 40 new-bank charter applications in roughly the past 18 months, and 23 of them, or 57.5%, involve some form of digital-asset activity.
- Comptroller Jonathan Gould puts those 23 digital-asset initiatives at eight times the level of four years ago.
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Why it matters
- constraint Barred from deposits and lending, Builders Bank can only earn fees on assets it holds, so its growth depends on winning custody mandates rather than on funding a balance sheet.
- precedent Once half a dozen crypto firms hold the same licence, the charter stops being the thing that wins the mandate, and institutional custody is fought over on controls, tokenization services and scale.
- exposure Because the objection from Warren targets the OCC's reading of the National Bank Act rather than any applicant's plan, approvals rest on a statutory argument the applicants do not control.
- decision Moving existing Block digital-asset activity inside a chartered entity trades routine federal examination for the counterparty acceptance institutions require.
Custody is a fee business. That is the point of the vehicle here: Builders Bank & Trust would hold bitcoin and stablecoins under fiduciary powers while being barred from taking deposits or making loans [1][3]. Its revenue is a charge on assets under custody rather than the spread a commercial bank earns between what it pays for funding and what it earns on assets. Lee Woolley, the proposed president and chief executive, cited Block's digital-asset experience and Square Financial Services as what positions the new entity [8]. What the charter buys is standing with one federal supervisor in place of a patchwork of state regimes and, on Davis Wright Tremaine's reading, a route toward qualified-custodian status [14].
Gould's own framing puts the arithmetic in view: twenty-three digital-asset applications is an eightfold increase over four years [6], which puts the base at roughly three [3], meaning the entire federal crypto-banking pipeline four years ago would have fitted into one meeting. Against 40 applications in about 18 months, 23 works out at 57.5% [5], and with 21 approved and two denied on The Block's count [7], seventeen files remain open [1] while the decided ones cleared at about 91% [2].
That is the problem with treating the charter as an asset. Anchorage Digital held this position alone for a long stretch [11], and the OCC has since conditionally approved BitGo, Paxos, Fidelity Digital Assets, Ripple and Circle's proposed First National Digital Currency Bank, with Circle taking final approval on July 10 [9][10]. A licence half a dozen custodians already hold functions as a qualification now, and the competitive ground has moved to security, compliance, tokenization services and institutional scale [12]. The other version, or rather the more interesting version, is that consolidation happens one level up: if institutional mandates and qualified-custodian treatment come to require a federal charter [14], the 23 applicants are the shortlist for institutional flow and the unchartered are left with retail, which concentrates the industry even while it crowds the chartered tier.
Settlement sits outside this deal. The charter carries no automatic deposit insurance and no Federal Reserve payment access [4], and the Fed's May proposal for a special-purpose payment account does not widen the pool of institutions eligible for Fed accounts [15]; Revolut's September 2 approval, which was permission to operate as a full-service insured national bank rather than a trust bank, is the other product on the shelf [16]. Senator Elizabeth Warren's May 18 letter to Gould calls the approvals an abuse of the National Bank Act and the applicants crypto banks looking to evade the obligations of being a bank [13], so the risk sitting on those open files is statutory rather than commercial. The view that this charter mainly serves as an entry ticket breaks in two places: if the Fed extends payment accounts to trust banks, a custody licence becomes a settlement rail worth paying up for, and if the denial count starts climbing, that 91% looks like a moment rather than a policy [2].
What to watch
- The seventeen OCC files still undecided, and whether the denial count moves past two.
- Whether the conditional approvals held by BitGo, Paxos, Ripple and Fidelity convert to final ones as Circle's did.
- Whether Block reports custody fee income separately from Square Financial Services if Builders Bank opens.