Why the Latest Wave of Crypto Firms Seeking US Bank Charters Raises Red Flags

Core Viewpoint - World Liberty Financial (WLFI) has applied for a national trust bank charter, aiming to expand its stablecoin services, amidst concerns from established banks regarding regulatory compliance and systemic risk [1][2][5]. Group 1: Company Developments - WLFI's affiliate, WLTC Holdings LLC, submitted a de novo application to the Office of the Comptroller of the Currency (OCC) to establish the World Liberty Trust Company, National Association (WLTC) [2]. - The planned institution will focus on stablecoin-related activities and will operate under a single federal framework, eliminating the need for individual state licenses [3]. - WLFI anticipates that WLTC will comply with the GENIUS Act, implementing strict anti-money laundering (AML), sanctions screening, and cybersecurity standards [4]. Group 2: Industry Reactions - Banking industry groups have expressed concerns that the issuance of trust charters to crypto firms could increase systemic risk and undermine the integrity of the charter framework [5][6]. - There are warnings about regulatory and supervisory gaps, as crypto firms may not be subject to the same comprehensive regulations that traditional banks face, including capital, liquidity, and risk-management standards [6]. - Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America, criticized the conditional approvals of national trust bank charters, stating it stretches the charter's purpose and endangers consumers [7].