[Digital Today reporter Seung-ah Yoo] An analysis says crypto firms may not fully break free of political pressure or supervisory risk even if they obtain a U.S. federal trust bank charter. It said the charter could both strengthen the legal status of custody operations and place a firm under the U.S. government’s direct supervisory framework, making it unclear whether approval will serve as a shield or as a tool to tighten oversight.

◆ Conflicting interpretations over Silvergate liquidation

On Sept. 9 (local time), blockchain media outlet CryptoSlate reported that Alan Lane (앨런 레인), former chief executive of Silvergate, said the bank maintained solvency and liquidity and could continue serving customers even after about 70 percent of demand deposits left in late 2022. In a statement released on Sept. 8, he said the March 8, 2023 liquidation announcement was made due to political and regulatory pressure. He argued that the administration of former U.S. President Joe Biden (조 바이든) made it difficult for Silvergate to continue operating.

By contrast, an inspector at the Federal Reserve in September 2023 presented a different cause. The inspector cited a deposit structure concentrated in the crypto industry, rapid growth and funding risks, along with significant weaknesses in governance and risk management. The Fed confirmed in July 2024 that Silvergate had completed liquidation and wind-down, repaid all customer deposits and no longer functioned as a bank. It also imposed a $43 million fine, citing problems with compliance with anti-money laundering rules.

Silvergate was also overseen by the Federal Reserve and the Federal Reserve Bank of San Francisco. But the model recently chosen by crypto firms differs from Silvergate’s. It is a federal trust bank focused on custody of customer assets rather than a deposit-based bank. A federal trust bank charter provides a clearer legal framework for custody operations while placing the firm under direct supervision by the Office of the Comptroller of the Currency (OCC). But the structure may still leave it dependent on other banks for cash.

The OCC conditionally approved in December 2025 the trust bank charter application for First National Digital Currency Bank promoted by Ripple (XRP) and Circle, and also approved conversions by BitGo, Fidelity Digital Assets and Paxos. Circle said on July 10 that it received final approval, adding it would initially conduct custody business for itself and affiliates and plans to add reserve management as a future function.

◆ Regulators retain control even with approval

A federal trust bank charter does not mean the authority of a typical deposit bank. Coinbase’s preliminary conditional approval on April 2 was also limited to digital asset custody and related services stemming from custody obligations. The trust bank is not a deposit-taking institution covered by deposit insurance, and it was required to keep fiat currency held in custody in accounts at a third-party bank for the benefit of customers. The structure places the custody function under federal supervision while maintaining ties with external banks for cash-related matters.

Regulators also retain control. The OCC’s preliminary approval for Coinbase can be amended, suspended or withdrawn depending on changes in circumstances. If there are material changes to the business plan during the organisation stage and the first three years of operations, it must provide prior notice and obtain written non-objection. The OCC abolished the general prior non-objection process for crypto-related activities on March 7, 2025, but that did not remove approval conditions applied to individual banks.

Rules on supervisory methods have also changed. The OCC and the Federal Deposit Insurance Corp (FDIC) established rules prohibiting adverse supervisory actions against banks based solely on reputational risk. The rules also restrict agencies from requiring or directing institutions to discontinue accounts or services solely because an activity is politically disfavoured but legal.

The two agencies on Aug. 27 also announced new standards for unsafe or unsound practices and for Matters Requiring Attention (MRA). The new standards focus supervision on material financial risk and deposit insurance risk, and exclude reputational concerns unrelated to financial condition. The final rule was issued on Sept. 1 and takes effect on Nov. 2. The OCC also adjusted supervisory and enforcement procedures to be proportional to risk.

Ultimately, a federal trust bank charter can provide crypto firms with a clearer legal status and control to carry out custody operations. But it also creates a direct supervisory relationship with the OCC and requires firms to accept supervisory conditions related to custody, compliance and financial soundness.

As the Silvergate case shows, bank status itself does not eliminate political and regulatory risks. The analysis says the task for crypto firms is not only to secure federal approval, but to run licensed businesses in a predictable manner under changing supervisory standards while also maintaining stable relationships with external banks.