Inside the OCC's Crypto Banking Decision: What Federal Charters Mean for the Industry

In December 2025, the Office of the Comptroller of the Currency (OCC) granted conditional national trust bank charters to five crypto firms:

BitGo
Circle
Fidelity Digital Assets
Paxos
Ripple

This isn’t just another licensing milestone. It’s the moment when crypto custody and settlement infrastructure formally crossed into the federal banking system.

What These Charters Actually Are

These are national trust bank charters, not full commercial bank charters.

What they can do:

Hold assets in custody (the core crypto use case)
Act as fiduciaries
Provide settlement and related trust services

What they cannot do:

Take demand deposits
Make commercial loans
Operate as full-service retail or commercial banks

Functionally, these firms now sit inside the federal banking perimeter. Instead of stitching together 49 state money transmission licenses, they answer primarily to a single federal regulator: the OCC.

That shift unlocks two things:

Regulatory clarity and efficiency – One primary prudential regulator instead of a patchwork of state regimes.
Institutional credibility – Many large asset managers, pensions, and insurers require federally supervised counterparties for custody and settlement.

Why This Happened Now

The timing is not accidental.

Institutional AUM in crypto has exploded. When BlackRock is running tens of billions in Bitcoin ETF assets, the custody chain is no longer a niche concern—it’s systemic plumbing.
Pensions, endowments, and insurers are entering. Their mandates often require fiduciary, bank-level oversight for core infrastructure.
The infrastructure gap became a risk. Crypto’s market cap and trading volumes outgrew the lightly regulated, state-licensed infrastructure that originally supported it.

The OCC, under Acting Comptroller Rodney Hood, has taken the position that crypto infrastructure is now squarely within its mandate. This isn’t a reluctant accommodation; it’s a strategic move to bring critical rails under federal supervision.

We’ve seen this movie before. In wealth management, the shift from broker-dealers to RIAs forced a rebuild of custody infrastructure under tighter supervision. The firms that built federally supervised custody early captured the lion’s share of institutional flows. The same pattern is now unfolding in crypto.

What It Means Operationally for the Five Firms

For BitGo, Circle, Fidelity Digital Assets, Paxos, and Ripple, conditional national trust charters are both an asset and a burden.

The Opportunity

Single primary regulator (OCC): No more managing dozens of state money transmitter licenses and inconsistent examinations.
Access to Fed payment rails (subject to approvals): More direct, reliable fiat settlement and integration with traditional banking.
Institutional-grade signaling: A federal charter is a powerful signal to risk committees, boards, and regulators that these firms operate under bank-level standards.

This combination makes them natural default providers for:

ETF and ETP custody
Prime brokerage-style services in crypto
Settlement and fiduciary roles for institutional allocators

The Obligation

Federal supervision comes with real weight:

OCC examination standards: Detailed, recurring reviews of governance, risk management, operations, and compliance.
Capital and liquidity expectations: Even for trust banks, capital planning and buffers become central.
Formal risk frameworks: Operational, cyber, third-party, BSA/AML, sanctions, and market risk programs must be examination-ready—not just documented.

The gap between “we have policies” and “we can withstand a full-scope OCC exam” is wide. Many crypto firms discover this only when they try to scale into institutional markets.

Competitive Implications: A Structural Advantage

These five firms now enjoy a structural advantage that compounds over time.

Institutional capital follows regulated rails. As more traditional finance allocates to crypto, mandates and internal policies will push flows toward federally supervised custodians.
State-licensed competitors get boxed into retail. Without a federal charter, many firms will find themselves limited to:
Retail and prosumer custody
Smaller funds with more flexible mandates
Geographies or products where bank-level oversight is not required

Over the next few years, expect:

Consolidation: Non-chartered custodians will increasingly seek partnerships, white-label arrangements, or acquisitions by chartered entities.
Pricing power shift: Federally chartered custodians can command premium pricing for high-stakes, institutional mandates.
Higher switching costs: Once large institutions integrate with a federally chartered custodian’s stack, operational and compliance switching costs rise sharply.

The core strategic question for every custody or settlement provider becomes:

Can you remain competitive in institutional markets without federal charter access?

For many, the realistic answers are:

Partner with a charter holder, or
Exit the institutional segment over time.

The Emerging Two-Track Regulatory World

The OCC’s move crystallizes a two-track structure for U.S. crypto infrastructure:

Federally supervised institutional track

National trust banks and, over time, potentially full-service banks with crypto capabilities.
Focused on large asset managers, pensions, insurers, corporates, and systemically relevant flows.

State-licensed retail track

Money transmitters, state-chartered trust companies, and non-bank custodians.
Focused on retail, prosumers, and smaller funds.

The tracks are diverging. Crossing from the retail track into the institutional track will increasingly require federal bank-level licensing, capital, and controls.

The Barrier to Entry Just Went Up

The December charters raise the bar for anyone who wants to play in institutional crypto infrastructure:

Capital requirements: Building and maintaining a bank-level balance sheet is expensive.
Compliance and risk infrastructure: You need mature programs, experienced leadership, and examination-ready documentation.
Time and execution risk: Moving from conditional to full charter status can take years and tens of millions of dollars.

The era of “garage-built” crypto custody is effectively over for institutional use cases. Startups can still innovate—but increasingly around software, tooling, and non-custodial models rather than core, regulated custody and settlement.

For Operators: Strategic Paths From Here

If you run crypto custody, settlement, or adjacent infrastructure, the OCC’s decision forces a choice.

Path 1: Pursue a Federal Charter

Who this fits: Well-capitalized firms with a clear institutional strategy and the patience to build bank-grade infrastructure.

Implications:

Multi-year regulatory engagement and buildout.
Need for seasoned banking, risk, and compliance leadership.
Shift in culture from “move fast” to “operate safely and demonstrably so.”

Conditional approval is the starting line, not the finish.

Path 2: Partner With Charter Holders

Who this fits: Firms with strong technology, distribution, or niche capabilities but without the appetite or resources for a charter.

Implications:

Faster time to market for institutional offerings.
Dependence on a partner that is also, in many cases, a competitor.
Margin compression as economics are shared with the chartered entity.

Expect chartered firms to build platform and white-label offerings specifically for this segment.

Path 3: Focus on Non-Custody Services

Who this fits: Product and engineering-led teams that can create value without touching client assets.

Examples:

Non-custodial wallets and key management tooling
Trading, analytics, and risk software
Compliance, surveillance, and reporting platforms
Infrastructure for DeFi, tokenization, and on-chain data

These areas remain more open to startups and do not require bank-level licensing, though they may still face securities, commodities, or state-level oversight.

The Only Bad Strategy: Ignoring the Shift

What you cannot do is assume this doesn’t affect you.

If you’re in custody or settlement, your competitive set just changed.
If you’re building around institutional flows, your future counterparties are likely to be federally chartered.
If you’re purely retail today, think carefully about whether you ever plan to move up-market.

Looking Ahead to 2026 and Beyond

The OCC’s December 2025 decision is a line in the sand:

Crypto custody is now officially a banking business.
Institutional infrastructure will be built on federally supervised rails.
The cost of admission to that tier is rising, not falling.

For operators, investors, and institutions, the takeaway is clear: align your strategy with a world where the most critical crypto infrastructure is regulated like core banking infrastructure—or risk being left on the wrong side of the regulatory divide.