- Key insight: The Office of the Comptroller of the Currency's interpretation that national trust banks can perform non-fiduciary custody has invited scrutiny from banks and legal experts.
- Supporting Data: In contrast with traditional banks, national trust banks do not take formal deposits, are exempt from FDIC insurance premiums, full bank capital rules and may avoid Bank Holding Company Act oversight.
- Forward look: Because non-fiduciary custody sits ambiguously within trust powers, banks could challenge the OCC's interpretation in court.
As cryptocurrency firms and fintech companies seek national trust charters under the more digital asset-friendly Trump administration, the Office of the Comptroller of the Currency's interpretative letter undergirding their applications is drawing greater scrutiny from the banking industry — and questions about how deferential courts might be to the OCC's interpretation.
Art Wilmarth, professor emeritus of law at George Washington University Law School, said the move to allow non-fiduciary custody depends on an especially liberal interpretation of the intent of the original legal language.
"There isn't a word in [the National Bank Act's provisions on trust powers] that says anything about non-fiduciary activities — that's totally out of left field," Wilmarth said. "It's clear that the OCC thinks that 'related' will allow them to run a Mack truck through."
Since the beginning of 2025, more than a dozen firms have applied for national trust charters with the OCC, driven by an
The banking industry's overriding concern is that new entrants with national bank charters could outcompete traditional banks in their core services and offerings because the new entrants have lower regulatory compliance costs.
Nationally chartered banks under OCC oversight are empowered to offer certain core services — often referred to as the "business of banking" — that include taking deposits, making loans, and engaging in market activities like derivatives trading. Those rights and responsibilities were first spelled out in the National Bank Act of 1864.
Under the act, activities that involve the banker making business decisions on a customer's behalf — known as fiduciary activities — are legally distinct functions that national banks were prohibited from engaging in. State-chartered banks had been allowed to exercise fiduciary powers as early as the late 19th century. The Federal Reserve Act of 1913 included stipulations that allowed national banks to offer some trust-related activities under the Fed's supervision — supervision that was later shifted back to the OCC.
Congress revised the National Bank Act in 1978 to provide that national banks could narrowly focus on trust-related activities. The wording of that revision said a nationally chartered firm "is not illegally constituted solely because its operations are or have been required by the Comptroller of the Currency to be limited to those of a trust company and activities related thereto."
All the fuss revolves around those last three words.
Whether "activities related thereto" includes engaging solely in non-fiduciary custody is not actually clear. According to Matt Bisanz, a partner with Mayer Brown, simply holding customer assets without exercising discretion fits awkwardly into this statutory framework.
"[Non-fiduciary custody] activity is arguably neither a fiduciary activity nor the business of banking," Bisanz said. "In the federal definition, it does not appear. If you look at the New York state definition of the business of banking, it does actually appear. … Safe deposit boxes at banks are one of the early derivatives of custodial activities."
The question about where a trust ends and a bank begins gained new life when the OCC published the 2021 letter authored by the agency's then–general counsel, now-Comptroller Jonathan Gould. That letter determined that trust banks could engage in non-fiduciary custody and related activities.
"[The letter] says if you're a national trust bank, and you engage in none of the things listed in [federally defined fiduciary powers], but you engage in a fiduciary activity under state law, that is fine. Oh, and we can also add to the list [of federally defined fiduciary powers] if we feel like it," Bisanz said. "It also says OCC could even allow national trust banks to engage in the business of banking under the National Bank Act … that's a little novel."
Gould has defended the interpretive letter on several occasions in recent months. In a speech at the Blockchain Association Policy Summit in December, he
"That letter was important, and is now probably more important than it was for several years because of the change in leadership and approach at the OCC," said Brian Montgomery, a partner at Pillsbury Winthrop Shaw Pittman and former New York bank regulator. "That goes beyond what might fall into the bucket of solely focusing on providing fiduciary service, and led to the interpretation that's been carried out now that allows national trust banks to do more than just provide a fiduciary service, and custody is a really important piece of that."
But while the OCC has said its favorable view of standalone non-fiduciary custody at trust banks is legally sound, the agency recently moved to codify the interpretive letter in regulation following industry outcry over the agency's approval of several trust company applications from crypto firms seeking non-fiduciary custody authority. In January 2026, the OCC
"Technically, that's not what the statute says," Bisanz said. "Technically the statute says, 'limits its activities to those of a trust company and those related thereto. So I think what this rulemaking is trying to do is eliminate that translation."
Lindsay Sain Jones, an assistant professor of legal studies at the University of Georgia's Terry College of Business, said the OCC's interpretation of the NBA stretches the statutory language beyond what it was intended to allow.
"While the phrase 'activities related thereto' is broad, reading it to encompass mass-market, non-fiduciary custody untethered from trust administration risks transforming the phrase into an open-ended authorization for bank-adjacent businesses that Congress did not contemplate," Jones said.
However, as Montgomery put it, enshrining the interpretation into a formal notice-and-comment rulemaking puts the agency's stance on more firm legal footing, because "regulation is more impactful and lasting than interpretive letters.
"The OCC did not, under the prior leadership, explicitly pull back that 2021 interpretive letter, but they kind of stopped using it," Montgomery said. "And so I think the move here is, 'Let's get this interpretation from the OCC in a formal regulation.' From a policy perspective, it gives more certainty to the industry that this is not going to be something that sort of seesaws back and forth depending on who's in leadership."
Traditional banks have
"Think from a bank's perspective, if you're an insured depository institution, there are a lot more regulatory requirements than there may be for certain of these trust banks," he said. "Whether that's through the Community Reinvestment Act, for example, getting deposit insurance … there's a view — I think I can understand this from a bank's perspective — that some of these banks that are being chartered may be doing things similar to what a bank would do, but without all of the same regulatory requirements."
That concern extends to supervision, says former Comptroller of the Currency Gene Ludwig.
"The big issue here, if I may say so, is the degree to which an entity chartered by the OCC as a trust institution has the same level of supervisory rigor that a bank does that's chartered by the OCC engaged in the same activity," said Ludwig. "Reading the regulations, it should be subject to annual supervisory visits, it should be subject to examination and high standards and anti-money laundering and other compliance rules and regulations enforced by the agency."
Ludwig said he is sympathetic to banks' skepticism, but
"These entities have not been regulated, and they've been allowed to do all kinds of things," said Ludwig. "I think it should and could end up being a very good thing where it brings them into the regulatory process where they should have been … but having said that, you can understand why there would be a good deal of skepticism on the part of the banks."
Jones said that allowing deposit-like functions at a large scale complicates a longstanding convention of U.S. financial regulation, which is that banks that accept certain kinds of public support, like Federal Reserve support during times of crisis, also have corresponding public obligations, like heightened supervision and regulation. Allowing trusts to gain the benefits of a national charter without being subject to the same obligations as banks will put banks at an unfair disadvantage.
"Institutions that benefit from federal banking charters have been expected to accept corresponding public obligations," Jones said. "While they technically do not permit deposit-taking or lending, they can support large-scale custody, payments, and yield-like incentives that replicate much of the functional appeal of banking, without [equivalent regulatory treatment]."
Viewed through a social-contract lens, "this begins to look less like benign specialization and more like functional arbitrage," Jones continued.
Another aggravating factor for banks is that, while the recently passed GENIUS Act regulating stablecoins bans the payment of interest on assets held in custody, firms have
"Congress had decided that stablecoins were not to have interest on them, and my interpretation of that is that Congress didn't want them to be like deposits," Ludwig said. "The non-bank industry found a way around that rule by relying on broker-dealers or their issuers to go ahead and give rewards and other things, and you have a like-kind situation that some would say circumvents the rule … we'll have to see what happens."
Jones suggests that the characteristics of the trust company business models in some ways resemble deposits, and that ultimately customers may conflate what looks and feels like a deposit with traditional deposits, despite the technical difference.
"Perhaps the line should be drawn not at formal ownership or labels, but at the point where custodial platforms begin to generate bank-like reliance and expectations," Jones said. "When firms offer yield, redemption at par, or integrated payments at scale, they invite customers to think of these custodial balances as deposits."
While the banking trade groups have so far limited their complaints to strongly worded letters, Ludwig thinks litigation isn't out of the question, even as he argues the OCC has ample leeway to implement the law.
"I think they have ample authority to interpret it," said Ludwig. "They can and might invite litigation if they don't use their authority in a way that is appropriate under the law. But I have confidence in the OCC that they will use their powers responsibly … if they don't, they go to court and/or back to the Congress."
Indeed, the extent to which custodial platforms replicate core banking functions without corresponding obligations may be difficult to settle durably without congressional involvement according to Jones.
"Congress added national trust powers to the National Bank Act to allow national banks to compete with state trust companies in fiduciary administration," Jones said. "Through successive interpretations, the OCC has extended those powers to encompass non-fiduciary custody and, ultimately, to custody-only national trust banks. In my view, the further this model departs from fiduciary duties — particularly as it scales and incorporates yield-like incentives — the harder it is to maintain that it reflects the activity Congress contemplated when it authorized trust powers in 1913."
