The Other GENIUS Act Story: How Nine Crypto Firms Quietly Became “National Banks”

Washington’s loudest fight over stablecoins has been about interest – whether reward points and affiliate yield let crypto platforms pull money out of bank deposits by the back door. Banks & Bankers covered that fight in detail when it played out under the CLARITY Act earlier this year. But while lobbyists argued about basis points, a quieter and arguably more consequential shift was happening at the OCC’s front desk: at least nine crypto firms – including Circle, Ripple, Paxos, BitGo, Fidelity Digital Assets, and Coinbase – have now been approved to operate as national trust banks, with over a dozen more applications pending. None of them take deposits. None of them make loans. All of them now carry the word “bank” in their name, with federal preemption and regulatory prestige that used to take decades to earn.

In Short – Key Takeaways

• The OCC conditionally approved five national trust bank charters in December 2025 (Circle, Ripple, BitGo, Fidelity, Paxos); by mid-2026 at least nine crypto-controlled trust banks had been approved – including Coinbase, Crypto.com, Stripe’s Bridge, and Protego – with a dozen-plus applications still pending, including from the Trump-family-backed World Liberty Financial.
• A national trust charter is not a commercial bank charter: it grants federal preemption over state money-transmitter licensing and custody authority for stablecoin reserves, but explicitly does not permit deposit-taking or lending.
• The capital gap is stark: Circle’s OCC-approved trust bank carries a minimum Tier 1 capital requirement of roughly $6 million – while managing a reserve pool north of $73 billion.
• The GENIUS Act’s better-known interest ban and the affiliate-rewards debate are a separate, parallel fight over deposit competition – worth reading on its own, and one this publication has already tracked closely.
• Internationally, regulators are drawing the “who counts as a bank” line very differently: Hong Kong has approved only two stablecoin issuers out of three dozen applicants, while the EU’s MiCA regime pushed Tether off regulated venues entirely rather than fold it into a bank-like structure.

What a trust charter actually buys you

The OCC’s national trust charter was, until recently, an obscure corner of banking law used mainly by custody specialists. The GENIUS Act turned it into the fastest route for a crypto firm to attach the word “national bank” to its name. What it delivers is real: federal preemption means an issuer no longer has to collect money-transmitter licenses state by state, and it lets a firm like Circle bring reserve custody in-house instead of relying on third-party banks.

What it does not deliver is full bank status. A national trust bank cannot take retail deposits or make loans, carries no FDIC deposit insurance, and – because it holds no loan book and takes no deposits – is not held to the same capital, liquidity, or Community Reinvestment Act obligations that apply to a commercial bank of comparable size. One legal analysis put it bluntly: the structure lets a stablecoin issuer gain national regulatory credibility “while avoiding the extremely heavy capital restrictions and operational compliance costs of traditional commercial banks.”

The capital math regional banks will notice

This is where the story becomes uncomfortable for the rest of the banking sector. Circle’s national trust bank was conditionally approved with a minimum Tier 1 capital requirement of roughly $6 million, against a reserve pool it will eventually manage north of $73 billion. A community bank holding a fraction of that in deposits would be carrying a capital base many multiples larger, plus stress-testing, CRA exams, and deposit insurance assessments that a trust bank simply does not face.

The OCC’s position is that this is proportionate: a trust bank that never takes deposits or extends credit carries a fundamentally different risk profile, so a lighter capital regime is defensible on its own terms. Critics counter that the risk isn’t absent, just relocated – a $73 billion reserve pool backing a payment instrument used by millions of consumers is a systemically relevant balance sheet by any reasonable definition, whether or not it technically meets the legal definition of a “deposit.”

For banks that spent nearly two decades since 2008 absorbing steadily heavier capital and compliance obligations, watching a new category of ‘bank’ get built next door with a fraction of the prudential weight is a legitimate competitive grievance – regardless of how the interest-and-rewards debate eventually resolves.

A different question than “will deposits flee”

It’s worth being precise about what this charter wave is not. It is not, by itself, the deposit-flight mechanism that dominates the CLARITY Act debate – trust banks don’t offer yield, and reserve custody isn’t a consumer-facing product competing for checking-account balances. What it changes is who gets to sit inside the regulated payments perimeter, and on what terms. A firm with a national trust charter can plausibly argue for closer integration with core payment rails – potentially including Federal Reserve master account access, a question regulators have not yet resolved – putting it structurally closer to a bank than a fintech, without carrying a bank’s balance-sheet obligations.

Internationally, other regulators are drawing that line in visibly different places. Hong Kong’s monetary authority approved just two stablecoin issuers out of three dozen applicants, treating the charter question as a high, slow bar rather than a fast lane. The EU went further still: rather than build a lighter-touch bank-adjacent category, MiCA’s authorization regime simply pushed the world’s largest stablecoin, Tether, off EU-regulated exchanges. Three regulators, three very different answers to the same underlying question – how much of a bank does a stablecoin issuer need to be.

What this means for bank leadership

The interest-and-rewards fight covered elsewhere is a fight over pricing – who can pay customers more for holding a cash-like balance. The charter question is a fight over infrastructure – who gets to sit inside the regulated core of the payments system, and under what prudential rules. Both matter, but they call for different responses. The rewards fight is a product and pricing problem; the charter gap is a lobbying and standards problem, and one where banks have a stronger factual case: if a $73 billion balance sheet is systemically relevant, it should be capitalized like one, regardless of the label on the charter.

Sources

1. Why the OCC’s Stablecoin Charter Push Is Illegal, Dangerous, and Likely to End in Bailouts
2. Stablecoin issuer Circle just got the greenlight to operate as a bank. The shares are up 5%
3. banksandbankers.com/category/fintech-and-innovation/
4. Stablecoin Rewards vs Bank Deposits: Why the CLARITY Act Has U.S. Banks on the Defensive
5. Circle Secures National Trust Charter as 140-Partner Rival Eyes Reserve Income

This article is for informational purposes only and does not constitute financial advice.