Zerohash is latest crypto firm to apply for a trust charter

• Key insight: Zerohash is pursuing its own trust charter from federal regulators as the latest in a long line of crypto firms to do so.
• Expert quote: “Stablecoin infrastructure is edging closer to the mainstream of regulated finance.” – DECTA CEO Scott Dawson
• Forward look: Expect additional crypto trust charter applications, and approvals, from the OCC in the coming weeks and months.

Digital asset infrastructure provider Zerohash has announced its application for a national trust bank charter.

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The charter application, filed on Wednesday with the Office of the Comptroller of the Currency, is the eighth pending application currently in the queue at the agency even as the OCC has conditionally approved multiple crypto trust charter applications in recent weeks.

An OCC trust charter will permit Zerohash to expand its services, including activities that fall under the GENIUS Act, under a formal federal framework, according to a company statement.

“Stablecoins and digital assets are increasingly becoming part of the core financial system,” said Stephen Gardner, chief legal and compliance officer at Zerohash. “Applying for a national trust bank charter is a natural next step in offering robust global licensing coverage and continuing to expand our product offering.”

Since the passing of the GENIUS Act last summer, trust charters have quickly become a way for crypto firms to integrate further into the banking system even as a range of lobbyists and banking trade groups have pushed back on the applications and their subsequent approvals.

National trust bank charters are a type of charter that allows digital asset firms to conduct non-fiduciary activities under interpretive letter 1176, authored in 2021 by now-Comptroller of the Currency Jonathan Gould, who was serving as the agency’s general counsel at the time. 

The letter authorizes firms with a trust charter to engage in “activities that are non-fiduciary in nature,” such as asset custody. Custody services, according to the OCC, are related to the settlement, safekeeping and reporting of customers’ marketable securities, and Gould has included digital assets in the OCC’s operating definition of “securities.”

Gould defended the agency’s consideration of fintechs for trust charters in an interview with American Banker back in November, and a month later the OCC granted conditional trust charter approvals to five digital asset companies. The agency has also approved trust charters for Stripe-owned Bridge and Crypto.com in recent weeks.

Coinbase, Morgan Stanley, Payoneer and the Trump family’s World Liberty Financial are also among the digital asset firms with trust charter applications pending on the OCC website as of Friday.

Scott Dawson, CEO of global payments processor DECTA, told American Banker that the uptick in national trust charter applications by crypto firms is “far from surprising” due to an increased interest overall in digital assets.

“While the industry will inevitably continue to debate the nuances of regulation, and whether specific charter acquisitions are premature, the overarching message is undeniable: Stablecoin infrastructure is edging closer to the mainstream of regulated finance,” he said.

In the past half-year, Zerohash has announced partnerships with One Pay and Morgan Stanley to provide digital asset services. Morgan Stanley submitted its own crypto trust charter to the OCC on Feb. 27 to support the partnership.

Zerohash had reportedly been in acquisition talks with Mastercard last fall, but a Zerohash spokesperson told Coindesk in January that the digital asset platform ultimately chose to remain independent and will not be acquired.