OCC Charter Fight Puts Digital Asset Custody Under Scrutiny
The crypto bank charter debate widened after the Office of the Comptroller of the Currency (OCC) cleared national trust charters tied to Coinbase, Ripple, Bitgo, and other digital asset firms, drawing scrutiny from U.S. Senator Elizabeth Warren. Bitgo CEO Mike Belshe responded in an open letter on May 19, defending fiduciary custody as a stronger consumer protection model.
His letter centered on the legal difference between custody and deposit-taking. Bitgo does not take deposits, lend customer assets, or commingle client property, Belshe explained. Instead, he said the company holds assets in segregated, bankruptcy-remote accounts under fiduciary duties. He contrasted that model with failed crypto firms that accepted customer assets, mixed them with corporate funds, and left customers with unsecured claims. The executive stressed:
“We do not take deposits. We do not lend customer assets. We do not commingle.”
Warren’s scrutiny covered Ripple National Trust Bank, Paxos Trust Company LLC, First National Digital Currency Bank, Fidelity Digital Asset Services, Bitgo Trust Company, Foris DAX National Trust Bank, National Digital Trust Company, Bridge National Trust Bank, and Coinbase National Trust Company.
Trust Charter Defense Centers on Risk, Reserves, and Oversight
Belshe also challenged Warren’s use of “crypto bank,” arguing that the phrase has no legal definition. He said the term changes meaning depending on whether an institution takes deposits and lends assets, or only holds digital assets in custody. That distinction shaped his broader defense of Bitgo’s charter.
National trust banks already hold assets including art, bullion, jewelry, farmland, business interests, and digital credentials, Belshe wrote. He argued that digital assets fit within that fiduciary framework. Bitgo holds a South Dakota state trust charter from 2018, plus regulated entities or licenses in New York, Switzerland, Germany, Dubai, and Singapore.
Stablecoin reserve custody drew a separate defense. Belshe said Bitgo holds reserves in full, without lending or maturity transformation. He also said Bitgo conducts auditor-backed reserve attestations twice monthly for stablecoin assets, alongside quarterly and annual audits. That cadence, he argued, gives clients, regulators, and the public more frequent verification than bank Call Reports.
Regulatory obligations for depository banks apply to different risks, Belshe wrote. Deposit insurance, capital rules, the Community Reinvestment Act, and Bank Holding Company Act supervision address institutions that borrow from depositors and lend at risk. Bitgo’s model, he said, avoids that activity through one-for-one fiduciary custody.
Belshe argued:
“The asset class does not change the structure.”
His closing invitation asked Warren to engage directly with Bitgo and its staff. Belshe said the company sought stronger oversight over the past decade and viewed the OCC charter as a federal extension of that approach, not an escape from supervision. He also proposed clearer terminology separating fractional reserve banks from reserve banks.
