Payward, Kraken’s parent, applied to the Office of the Comptroller of the Currency for a national trust charter Friday under the National Bank Act, filing to establish Payward National Trust Co. and provide fiduciary custody services for digital assets. Co-CEO Arjun Sethi announced the application in a blog post.
The application builds on Kraken Financial, Payward’s special-purpose depository institution, which recently became the first crypto firm to receive a Federal Reserve master account. An OCC trust charter alongside that Fed account would add a second regulatory pillar to Payward’s banking strategy, Sethi wrote.
Comptroller Jonathan Gould has already granted similar charters to Ripple, Paxos, Crypto.com, and Coinbase over the past year. If approved, PNTC would target institutional clients and individual customers seeking “regulated, bank-level custody and trust services” for digital assets.
There’s a catch. The Bank Policy Institute is weighing a lawsuit against the OCC to prevent it from issuing national trust charters to crypto firms, a source told The Guardian in March. The Independent Community Bankers of America pushed back in April as well, with president Rebeca Romero Rainey calling the OCC’s final chartering rule “inconsistent with its statutory authority laid out in legislative history, judicial interpretations, and the agency’s own internal precedent.”
If BPI sues and wins, it wouldn’t just halt Kraken’s application. It could shut the OCC’s trust charter window for crypto firms entirely.
Payward filed for an IPO earlier this year and acquired payments company Reap for $600 million last week. The BPI hasn’t announced a timeline for its potential lawsuit.
— James Okafor