From the margin to the heart: five crypto institutions obtain federal bank status and redefine access to the American payment system

On December 12, 2025, the Office of the Comptroller of the Currency (OCC) conditionally authorized five digital asset companies — Ripple, Circle, Paxos, BitGo, and Fidelity Digital Assets — to convert into National Trust Bank with a federal license. Although the market’s immediate reaction remained subdued, this measure marks a structural break in the American regulatory paradigm.

For years, crypto firms have operated as unwanted guests within the traditional financial system, subjected to arbitrary banking disruptions and forced to navigate a maze of fragmented state regulations. Today, for the first time, they acquire a status that opens the door to something more significant: direct access to Federal Reserve settlement channels, with the ability to process irrevocable transactions via Fedwire, without commercial banking intermediaries.

This is not merely a rebranding of regulatory labels. It is the official declaration that activities related to digital assets — from tokenization to stablecoin issuance — are now considered legitimate banking functions at the federal level.

From “De-banking” to Institutional Recognition

During the Biden administration, the crypto sector experienced what regulators tacitly called “risk isolation.” After the FTX collapse in 2022, the American banking system was encouraged — sometimes through informal pressure — to maintain a safe distance from digital activities.

The exit of Silvergate Bank and Signature Bank from crypto account management symbolized this phase. In 2023, when Silicon Valley Bank failed, Circle was left holding $3.3 billion in USDC reserves temporarily frozen within the banking system — an event that still serves as a warning about the fragility of the intermediation chain.

The logic was simple: better to contain risk than to regulate it. With Trump’s administration returning in 2025, that logic was completely overturned. Dollar-backed stablecoins are now framed as tools for extending and reinforcing the US dollar in the digital economy. This strategic reinterpretation provided the political foundation for the OCC’s action.

What really changes with the “National Trust Bank” license?

It is crucial to clarify a frequently misunderstood point: these five companies did not obtain a traditional commercial banking license. A National Trust Bank is a very specific regulatory category, historically used for asset management and institutional custody.

However, the value does not lie in the amount of authorized activities but in the level of federal supervision and the right to access centralized settlement infrastructure.

The dual system and federal sovereignty

In the American banking system, financial institutions choose between state or federal regulation. The latter, granted by the OCC, confers “federal preeminence”: an institution no longer needs to conform to individual state regulations.

Before this authorization, companies like Circle, Ripple, or Paxos had to acquire a Money Transmitter License (MTL) in each of the 50 states to operate nationwide. This involved a patchwork of compliance requirements, high administrative costs, and inefficiencies in operational expansion.

With federal trust bank status, the regulator becomes the OCC, compliance pathways unify, and the company can operate nationwide under a single regulatory standard.

What they CANNOT do (and why it doesn’t matter)

Traditional banking authorities emphasized that these “banks” cannot accept insured public deposits from the FDIC nor grant commercial loans. According to the Bank Policy Institute (BPI), representing large institutions, this would be an “asymmetric” access to banking privileges.

But this limitation aligns with the operational structure of crypto companies. Stablecoin issuers operate under a 100% reserve model — they do not extend credit, nor do they utilize fractional reserve multipliers. Consequently, they do not pose the “maturity mismatch” risk typical of traditional banks. FDIC insurance is unnecessary and would only add compliance burdens.

More importantly: the trust bank license is based on a legally binding fiduciary duty. Customer assets must be strictly segregated from the institution’s own funds, with legal priority given to customers in insolvency. After the FTX scandal and misappropriation of customer funds, this protection represents a qualitative leap in sector credibility.

The real prize: access to Fedwire and the Federal Reserve’s main account

Jonathan Gould, head of the OCC, clearly stated that this opening aims to offer “new products, services, and sources of credit, ensuring a dynamic, competitive, and diversified banking system.” This statement laid the political groundwork for inclusion.

The key point is not the “bank” title but the fundamental right that comes with it: the ability to request a main account at the Federal Reserve, connecting directly to Fedwire and federal settlement networks.

Take Paxos: although it was already under close supervision of the New York State Department of Financial Services, the state license had an intrinsic limitation — it could not integrate into the federal payment network.

With the new federal license, Paxos — like Circle, Ripple, and others — will be able to settle final dollar transactions irrevocably and in real-time, no longer relying on commercial banks as intermediaries. In the critical node of fund settlement, Circle and Ripple will for the first time be on the same systemic level as JPMorgan or Citibank.

Structural economics: cost advantages

The cost reduction from direct Fedwire access is not marginal but structural.

Currently, each stablecoin transaction passes through a commercial bank, which charges intermediary fees. With direct connection to the Federal Reserve system, these intermediaries are eliminated, along with associated costs of fees, account management, and liquidity management.

Based on the Federal Reserve’s public fee structure for 2026 and industry practices, high-volume institutional payments via Fedwire could reduce overall settlement costs by 30%-50% compared to the correspondent banking model.

Consider Circle: its USDC reserves amount to nearly $80 billion, with massive daily fund flows. If it establishes direct connection, the savings on transaction fees alone could reach hundreds of millions of dollars annually. This is not marginal optimization but a radical reconfiguration of the underlying economy.

How legal and credit properties of stablecoins change

In the previous model, USDC or RLUSD were essentially “digital vouchers issued by tech companies.” Their solidity depended on the issuer’s governance and the robustness of custodian banks.

In the new setup, stablecoin reserves will be deposited in a federally supervised fiduciary system overseen by the OCC and legally segregated from the issuer’s assets. It is not a Central Bank Digital Currency (CBDC) nor FDIC-insured, but the combination of “100% reserve + federal supervision + fiduciary duty + irrevocable access to settlement system” confers a credit profile superior to most offshore stablecoins.

For Ripple, the benefit is tangible: its product ODL (On-Demand Liquidity) has long been constrained by banking hours and fiat channel availability. Once connected to the federal settlement system, the conversion between fiat and on-chain assets will no longer be limited by time windows, drastically improving cross-border settlement certainty and continuity.

The GENIUS Act: the regulatory foundation

In July 2025, President Trump signed the GENIUS Act, providing for the first time an explicit federal framework for stablecoins and the institutions issuing them.

The law recognizes the right of non-bank institutions to be regulated at the federal level as “qualified payment stablecoin issuers” (emittenti qualificati di stablecoin di pagamento), a category previously nonexistent.

The requirements are strict: stablecoins must be supported 100% by highly liquid assets (cash in dollars or short-term US government securities). This excludes algorithmic stablecoins and high-risk models, aligning perfectly with the structure of trust banks that do not accept traditional deposits.

The law also introduces the priority right of stablecoin holders: in case of issuer insolvency, reserves must be used first to reimburse stablecoins. This provision significantly reduces regulatory concerns about moral hazard and enhances institutional credibility.

In this context, the OCC’s granting of federal licenses to Circle, Ripple, and others becomes a natural regulatory implementation of the legislative framework.

Wall Street resistance and the next hurdle

The reaction from traditional banks, represented by the Bank Policy Institute, has been fierce. Three main objections.

First objection: regulatory arbitrage. BPI argues that these crypto companies use the “trust” status to mask systemically important banking activities — payments, settlements — without subjecting themselves to consolidated supervision required of banking holding companies, such as software development reviews or external investments.

Second objection: breaking the bank-trade separation. Allowing tech firms like Ripple to own banks violates the firewall preventing industrial giants from exploiting banking funds. Moreover, these companies can leverage their monopolies on data and social networks without complying with obligations like the Community Reinvestment Act.

Third objection: lack of a safety net. Since they are not covered by the FDIC, a panic over stablecoins could trigger a systemic crisis without deposit insurance cushion.

The final battleground: the Federal Reserve

The OCC’s authorization is not the end of the process. The final — and most critical — obstacle lies with the Federal Reserve: approval to open the main account at its payment systems.

Wyoming’s crypto bank Custodia Bank has filed a lengthy legal challenge after the Fed denied it access, demonstrating a significant gap between banking license and actual Fedwire access.

This will be the next epicenter of traditional banking lobbying. If they cannot prevent the OCC from granting licenses, they will seek to influence the Federal Reserve by imposing extremely strict requirements — e.g., AML standards comparable to JPMorgan or additional capital guarantees from parent companies.

Broader implications and upcoming controversies

Although the GENIUS Act is in force, many implementing provisions remain undefined. Capital requirements, risk isolation, cybersecurity standards, and technical rules will be subject to intense regulatory negotiations.

State regulators, especially the New York State Department of Financial Services (NYDFS), which has historically dominated crypto regulation, may raise legal challenges over the erosion of their powers due to the expansion of federal preeminence.

At the market level, obtaining banking status could catalyze consolidations: traditional banks acquiring crypto firms to strengthen technological capabilities, or vice versa, crypto firms entering the banking sector. The landscape of American finance could undergo significant structural adjustments.

Conclusion: a new beginning, not an end

The OCC’s approval does not mark the culmination of controversies but rather their beginning in a new chapter. Crypto finance is now an integral part of the federal infrastructure, but the path toward balancing innovation, stability, and fair competition remains fraught with challenges.

What is certain is that the “correspondent banking” model — where crypto firms operate under custodianship of intermediaries — is destined to decline. With federal recognition and access to the Federal Reserve’s settlement system, Circle, Ripple, and others are no longer tolerated guests but systemic actors. This change in status represents one of the most significant realignments in American finance in recent decades.