What It Means To Be A Bank Is Rapidly Changing

Hey all, Jason here.

I was working from Mexico City last week, and, I have to say, I missed my timezone arbitrage. Working from seven hours ahead of the U.S. east coast lets me spend all morning on focused work, before my inbox and phone start blowing up. Being one hour behind has been… different. Being in Mexico City did allow me to swing by the Stablecon Roadshow on Wednesday — congrats to Nik Milanović and team on a great event!

Mitchell Troyanovsky, Matt Harpe and the entire Basis team also deserve congratulations on announcing they have raised a $100 million round that values the company at a $1.15 billion. The round was led by Accel with participation from GV and former Goldman Sachs CEO Lloyd Blankfein. I’m proud to have been an early investor and supporter in the company, and seeing the caliber of the team and its execution is inspiring.

Last but not least, if you missed the conversation I moderated on managing risk in layered bank-fintech partnerships with Unit21’s Trisha Kothari and Cable’s Natasha Vernier, you can watch the replay here.

What It Means To Be A Bank Is Rapidly Changing

The oft-used quote, widely attributed to Vladimir Lenin, that “there are decades where nothing happens; and there are weeks where decades happen,” presumably wasn’t in reference to the banking industry. But it feels apt to describe the current pace of change in the U.S. banking system.

In just the last several weeks, numerous entities have newly applied or received the necessary approvals to charter de novo banks:

• Morgan Stanley applied to form Morgan Stanley Digital Trust, a national trust bank focused on digital assets
• Nomura applied to form Laser Digital National Trust Bank, focused on digital assets
• Payoneer, a global HR/payroll platform, applied to form PAYO Digital Bank, which includes a focus on developing and using stablecoins as part of its business
• Stripe, the parent of stablecoin infrastructure company Bridge, received conditional approval to form Bridge National Trust Bank
• Foris DAX, the parent of Crypto.com, received conditional approval to form Foris Dax National Trust Bank, which will do business as Crypto.com National Trust Bank
• World Liberty Financial applied to form World Liberty Trust Company, focused on digital assets
• General Motors received approval of its deposit insurance application necessary for its Utah-chartered industrial loan bank, GM Financial Bank
• Edward Jones received approval of its deposit insurance application necessary for its Utah-chartered industrial loan bank, Edward Jones Bank
• Nubank, which holds a charter in its home country of Brazil, received conditional approval as a full-service deposit-taking bank
• Erebor received its national bank charter and officially began operating on Sunday, February 8th

And this is just a subset of recent activity — numerous charter and, as applicable, deposit insurance applications remain pending, including from PayPal (Utah industrial loan company), Affirm (Nevada industrial loan company), OneMain (Utah industrial loan company), Nissan (Utah industrial loan company), Stellantis (Utah industrial loan company), Coinbase (national trust bank), bunq (full-service national bank), Mercury (full-service national bank), and others.

In addition to the pace of applications themselves, the Office of the Comptroller of the Currency has undertaken a rulemaking process to “clarify” the types of activities in which national trust companies are permitted to engage.

The final rule, released on Friday, amends the OCC’s chartering regulation at 12 CFR 5.20 to:

• align with the OCC’s statutory authorization to charter national banks limited to the operations of a trust company and activities related thereto;
• change references from “fiduciary activities” to “operations of a trust company and activities related thereto.”

Unsurprisingly, not everyone is pleased with the scale and pace of change, particularly incumbents who are seeing the regulatory moat they have enjoyed eroded.

The American Bankers Association’s comment letter on the OCC’s “clarification” explicitly acknowledges “the great technological sea changes we are witnessing in seemingly every corner of the economy,” including in the financial services industry.

The ABA essentially argues that the OCC’s approval of trust bank charters associated with firms seeking to use them as part of digital asset and stablecoin businesses is premature, as regulations implementing the GENIUS Act haven’t yet been formulated and finalized. The group’s comment letter states:

The regulatory responsibilities of many recent OCC charter applicants and likely many future OCC charter applicants are not readily identifiable today because Congress and federal and state regulators have not yet adequately defined regulatory frameworks applicable to entities engaged in stablecoin and other digital asset activities.

For example, the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act requires that not only OCC but also the U.S. Department of Treasury (Treasury), the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and state regulators to undertake significant rulemakings to implement key parts of the landmark federal stablecoin regulation.

The ABA also argues that there has been a lack of transparency around the chartering process, as “publicly available portions of some recent OCC charter applications have not provided sufficient information for the public to reliably assess or provide meaningful comment on applicants’ proposed business models and the potential safety and soundness risks their operations may pose.”

Likewise, the Conference of State Bank Supervisors, a trade group that represents state banking regulators, argues in its comment letter that “[t]he OCC may not use the NTC charter to authorize a new class of national bank that is neither predominately engaged in the fiduciary operations of a trust company nor in receiving deposits as an insured national bank.”

CSBS notes that “Congress authorized the OCC to charter three types of institutions: (1) national banks, to carry out the business of banking; (2) NTCs, to conduct fiduciary trust activities; and, (3) bankers’ banks, to conduct correspondent banking” and argues that “[t]he OCC should clarify that NTCs must predominantly engage in fiduciary activities, and any nonfiduciary activities must be incidental to carrying out an NTC’s trust business.”

“The OCC should clarify that NTCs must predominantly engage in fiduciary activities, and any nonfiduciary activities must be incidental to carrying out an NTC’s trust business,” the CSBS argues.

Trade Groups Silent on Trump-Affiliated World Liberty Financial Charter App

It isn’t just the potential expansion of activities national trusts can engage in that some incumbents are opposed to — various trade groups filed comment letters opposing the charters of numerous applicants.

The Bank Policy Institute (BPI), which represents the nation’s largest banks, including names like JPMorgan Chase, Citigroup, and Goldman Sachs, and the Independent Community Bankers of America (ICBA) filed comment letters objecting to at least eight recent trust charter applications, including those from Stripe, Coinbase, Wise, Ripple, and Circle.

The trade groups argued that these trust charter applications lacked sufficient detail and that some proposed activities could fall outside the scope of what Congress intended in authorizing the OCC to issue such charters.

But, reporting from Law360’s Aislinn Keely last week points out, the trade groups declined to file comment letters opposing one trust charter application: World Liberty Financial Trust Company, N.A.’s.

World Liberty Financial Trust Company’s application states that its “primary goals are to deliver superior financial products and drive mainstream adoption of USD1 [a USD-pegged stablecoin], which will be issued by WLTC. Along with issuance and redemption of USD1 and maintenance of the required Reserve, WLTC seeks to provide digital asset custody services to institutional investors.”

The intent with forming the trust bank appears to be to supplant the existing World Liberty Financial/BitGo relationship. Presently, according to disclosures on the website of World Liberty Financial, “BitGo issues USD1, and World Liberty Financial, Inc. and affiliated entities, own the World Liberty Financial USD1 brand and provide certain services.” BitGo, a South Dakota-chartered trust company, holds the assets backing USD1.

A PR firm told CoinDesk that World Liberty Financial and the proposed trust bank are “entirely separate companies that share similar branding and names, but the ownership and operating structures are substantively different.”

Notably, World Liberty’s trust charter application states that “[t]he organizers are not aware of potential conflicts of interest with respect to the operations of [World Liberty Trust Company].”

The organizers and proposed directors of World Liberty Trust Company are:

• Zachary Witkoff, co-founder of World Liberty Financial and son of administration special envoy to the Middle East Steve Witkoff;
• Robert Witkoff, brother of Steve Witkoff;
• Scott Alper, president and chief investment officer of The Witkoff Group;
• Erin Baskett, founder/CEO of Sine Qua Non Capital, as a proposed independent director for the trust bank;
• and Jeffrey Weiner, chairman/CEO of New York car dealer group Integrity Automotive and chairman/CEO of film production company Captive Entertainment, as a proposed independent director for the trust bank.

According to the Law360 article, BPI and ICBA, the bank trade groups, did not respond to questions about the absence of comment letters on World Liberty Financial Trust Company’s application.

Four groups did file comment letters regarding World Liberty Financial’s charter application: the National Community Reinvestment Coalition, Americans for Financial Reform, Public Citizen, and Fair Finance Watch.

Warren, Skeptical of Erebor’s Speedy Approval, Demands Records Related to Charter App

Trump’s World Liberty Financial isn’t the only firm entering the banking space with political connections that have raised eyebrows.

Erebor, founded by Palmer Luckey and Palantir cofounder Joe Lonsdale and backed by venture capitalist Peter Thiel, has drawn questions about the speed with which its charter application was approved.

Erebor filed its application with the OCC on June 11, 2025, received conditional approval on October 15, 2025, and got the OK to begin operating this February.

The bank aims to fill gaps in the market left after the abrupt collapse of Silicon Valley Bank in 2023 and, per its charter application, intends to serve the “innovation economy,” including technology companies focused on virtual currencies, artificial intelligence, defense, and manufacturing, as well as payment service providers, investment funds and trading firms (including registered investment advisers, broker dealers, proprietary trading firms, and futures commission merchants).

Erebor also plans to serve “serve select individual consumers in the high and ultrahigh net worth category who work for, or invest, in such companies” and provide certain deposit and payment services to foreign banks.

In advance of last week’s Senate Banking Committee hearing that featured appearances from Comptroller Gould, Fed Vice Chair for Supervision Michelle “Miki” Bowman, Federal Deposit Insurance Corporation Chair Travis Hill, and National Credit Union Administration Chair Kyle Hauptman, ranking committee member Senator Elizabeth Warren (D-MA) sent letters to the OCC, FDIC, and Erebor demanding information related to the bank’s application and approval process.

In her letter to the OCC, Warren writes, “The facts and circumstances of this application raise serious questions about the legal legitimacy of Erebor’s charter and whether the OCC’s process was contaminated by backroom political manipulation.”

Warren is asking the OCC, the FDIC, and Erebor to produce documents and records that include:

• Erebor’s full unredacted charter application, including all Confidential Exhibits;
• Erebor’s full unredacted deposit insurance application, including all ConfidentialExhibits;
• all texts, emails, phone records, and other written communication between theOCC and either the White House or representatives of Erebor regarding the company’s charter application;
• all texts, emails, phone records, and other written communication between theFDIC and either the White House or representatives of Erebor regarding the company’s deposit insurance application;
• the dates and times of any meetings between the OCC and representatives of Erebor regarding its charter application;
• the dates and times of any meetings between the FDIC and representatives of Erebor regarding its deposit insurance application;
• and a copy of an Erebor fundraising memo reported on by Business Insider that described the company and its backers as having “unique connectivity” to banking regulators, among other items.

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Seven Key Takeaways From FDIC’s Q4 2025 Quarterly Banking Profile

The FDIC released its quarterly banking profile for Q4 2025 last week. The snapshot provides a rich data set assessing the overall financial condition of the U.S. banking system.

In aggregate, U.S. institutions captured in the data set generated net income of $295.6 billion in 2025, with return on assets increase 8 bps over 2024 to 1.20%.

Net income for Q4 declined by $1.6 billion in Q4 vs. the prior quarter. The change in net income was primarily driven by increases in net interest income (up $4.1 billion), which was more than offset by growing noninterest expenses (up $5.1 billion).

Net interest margin increased slightly quarter over quarter, growing 5 bps. Smaller institutions continue to outperform the country’s largest on NIM.

Change in NIM was driven by a drop in the cost of funds that outpaced a decrease in the yield on earnings assets.

Unrealized losses on securities continued to shrink, with total unrealized losses decreasing by 9.2% or $31 billion in Q4.

Total loans outstanding grew by 2% or $267.8 billion in Q4, with the annualized rate of growth continuing to climb. The largest drivers of increasing balances include loans to nondepository financial institutions and credit card loans.

Finally, despite increasing concerns about credit quality in some areas of the economy, notably private credit, past-due/nonaccrual and net charge-off rates remained generally stable. The past-due/nonaccural ticked up slightly, to 1.56%, and the industry-wide net charge-off rate grew by 1 bps to 0.63%.

Everything Else: Trump Admin Floats Requiring Banks To Collect Citizenship Info, Binance Facilitated $1.7Bn in Iranian Transactions, Stripe’s Annual Letter (Paying Subscribers Only)

The Trump administration is considering an executive order or other mechanism to require banks to collect documentation on the citizenship of accountholders, the Wall Street Journal reported last week.