New on-chain bank receives conditional OCC approval

• Key insight: OpenReserve Bank, a proposed on-chain ledger based bank, has secured a conditional OCC charter approval and a $25 million seed funding round.
• Expert quote: Klaros Group's Roman Goldstein said the OCC seems to be "breaking down the distinction between bank deposits and stablecoins."
• Supporting data: The proposed bank's initial capitalization requirements are $210 million with a 12% tier 1 leverage ratio.

Two former MoneyLion executives have received conditional approval from the Office of the Comptroller of the Currency to open a de novo national bank with proprietary blockchain technology.

The proposed bank, called OpenReserve Bank, is looking to bridge traditional banking with blockchain infrastructure and digital-asset services with tokenized deposits. It is also planning to open a stablecoin issuing subsidiary and a banking-as-a-service platform, according to an OCC decision letter released on Thursday.

OpenReserve is the latest de novo digital bank exploring digital asset infrastructure to receive approval from the OCC, with Augustus Bank also receiving conditional charter approval earlier this year. Both banks are targeting institutional customers.

The proposed bank's directors initially filed its charter application with the agency in April of this year. The decision letter noted that for OpenReserve, "an application for the [stablecoin] subsidiary has not yet been filed."

Dee Choubey, co-founder and proposed CEO for OpenReserve Bank, confirmed with American Banker that the company is filing a separate subsidiary application "in short order" for issuing its proposed dollar-backed stablecoin.

"We will absolutely be issuing our own GENIUS Act-compliant stablecoin," he told American Banker. "We're still awaiting final rules from the OCC and others, but practically, by the time we are open for business, those rules will be out and we will be in compliance with the GENIUS Act in terms of issuing our own ReserveUSD stablecoin."

The OCC also published its approval of SoFi's stablecoin issuance subsidiary on the same day it announced OpenReserve's conditional charter approval.

"We now have three banks with deposit tokens and stablecoins," Klaros Group senior director Roman Goldstein told American Banker. "Between Augustus, OpenReserve and SoFi, it seems like what the OCC is going for is breaking down the distinction between deposit tokens and stablecoins, or more generally bank deposits and stablecoins."

The OCC's decision letter formally acknowledged that Open Reserve will offer banking-as-a-service as one of its services. Goldstein said in a LinkedIn post that this is a first and it's an example of "revised thinking" from regulators. 

He also told American Banker that OpenReserve is joining the ranks of other digital banks in treating stablecoins and tokenized deposits as fungible.

"It seems like these banks are going to treat stablecoins and deposit tokens interchangeably," Goldstein said, "and that's going to give us what the central bankers of the world call the 'singleness of money,' which is different types of instruments being worth one dollar and everyone treating them as fungible."

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The proposed bank's initial capital requirements, according to the conditions laid out in the OCC decision letter, "shall be no less than $210 million" with a "tier 1 leverage ratio of no less than 12.0 percent."
"At least for a de novo it's on the larger side of the capital [requirements], but that's all intentional and it's part of the strategy," Choubey said.

Before commencing banking operations, OpenReserve Bank must satisfy the OCC's conditional requirements and get approval from other regulators such as the FDIC.

"Preliminary conditional approval to charter a de novo national bank is a privilege our team does not take lightly," Choubey said.

The proposed bank also announced a $25 million seed funding round led by Andreessen Horowitz, also known as a16z, with contributions from other investors such as Coinbase Ventures, Jump Capital, Acrew and Zero Knowledge Ventures.

"Our prospective customers run global businesses that operate continuously, and there is real capital to unlock when their bank works the same way," OpenReserve co-founder and proposed president Richard Correia said in a statement. "That is what we are building: one unified on-chain ledger inside a national bank where payments settle instantly in any market, the assets a company already owns can be financed against that same ledger and every asset becomes working capital rather than a line item."

Choubey and Correia started building OpenReserve together after MoneyLion was acquired by Gen Digital last year. Other proposed directors for the bank include former MoneyLion board chairman John Chrystal, former OCC advisor and current Anchorage Digital director Jame Sloan and former Robinhood chief information and security officer David Schwed.