How to Secure a US National Trust Charter: A Step-by-Step Guide
Introduction
Obtaining a US national trust charter from the Office of the Comptroller of the Currency (OCC) is a rigorous but strategic move for financial firms, especially those in the crypto space. In May 2023, Payward, the parent company of Kraken, took this bold step by filing an application to form the Payward National Trust Company. This guide breaks down the process into clear, actionable steps, using Kraken’s case as a real-world example. Whether you’re a fintech startup or an established exchange, understanding this pathway can help you navigate federal regulation and expand your services. Here’s what you need to know and do.
What You Need
- Legal counsel with expertise in banking and OCC regulations
- Detailed business plan outlining proposed trust activities, risk management, and compliance
- Corporate governance documents (e.g., articles of incorporation, bylaws)
- Financial statements for the parent company (audited preferred)
- Capital adequacy evidence – minimum capital requirements set by the OCC
- Background information on directors, executives, and key shareholders
- Compliance policies for anti-money laundering (AML) and know-your-customer (KYC)
- Technology infrastructure details – especially for digital asset custody (if applicable)
Step-by-Step Guide
Step 1: Understand the OCC’s Role and Requirements
Before you begin, research the OCC’s chartering process for national trust companies. The OCC regulates federally chartered banks and trust companies. A national trust charter allows a firm to act as a fiduciary, custodian, or trustee. For crypto-focused firms like Kraken, the charter can enable services like digital asset custody. Review the OCC’s Comptroller’s Licensing Manual and the Trust Charter Application guidance. Payward’s application, for example, signals a compliance-first approach. Identify key requirements: minimum capital (often $1–$5 million or higher), a proven management team, and a solid business plan.
Step 2: Prepare Your Corporate Structure and Business Plan
Draft a comprehensive business plan that covers your proposed trust activities (e.g., holding assets, settling trades, managing trusts). For crypto firms, explain how you’ll securely custody digital assets, comply with state and federal laws, and manage unique risks. Establish a corporate structure: typically a wholly owned subsidiary of the parent company (e.g., Payward National Trust Company under Payward Inc.). Include governance policies, risk management frameworks, and profit projections. This document will be the core of your application.
Step 3: Gather Required Documentation
Compile all necessary paperwork. This includes:
- Articles of incorporation and bylaws for the proposed trust company
- Organizational chart showing parent-subsidiary relationships
- Financial statements of the parent (audited for the last three years)
- Resumes and background reports for directors and senior officers
- AML/KYC program and Bank Secrecy Act compliance manual
- IT security and data privacy policies, especially if handling crypto keys
- Capital plan demonstrating that the trust company will maintain required capital levels
Payward, for instance, likely submitted detailed proof of Kraken’s operational history and financial health.
Step 4: Submit the Application to the OCC
File the official application using the OCC’s online portal or by mail. The application includes a cover letter, the business plan, and all supporting documents. Pay the filing fee (typically $20,000–$100,000 depending on complexity). The OCC will review the application for completeness. If incomplete, they may request additional information. Payward’s filing in May 2023 initiated a review period that could last several months.
Step 5: Engage in the Review and Comment Process
After submission, the OCC assigns a team of examiners. They will conduct a thorough evaluation, including a background check, financial analysis, and on-site visit if needed. The OCC also publishes a notice of the application in the Federal Register, allowing public comment (usually 30 days). As part of the process, you may need to respond to questions from the OCC and address any concerns raised by commenters. For crypto firms, expect extra scrutiny around cybersecurity and money laundering risks. Be transparent and responsive.
Step 6: Obtain Approval and Establish the Trust Company
If the OCC determines that the application meets all requirements, they will issue a conditional approval. You may need to meet additional conditions (e.g., raise capital, hire key staff) before the charter becomes final. Once conditions are satisfied, the OCC issues a national trust charter. Your entity can now operate as a trust company under federal supervision. Payward, if approved, would become Payward National Trust Company, offering regulated custody services for digital assets.
Tips for a Successful Application
- Start early – the process typically takes 6–12 months, so plan ahead.
- Hire experienced legal counsel – OCC regulations are complex; don’t go it alone.
- Demonstrate strong capital reserves – undercapitalization is a common rejection reason.
- Showcase compliance culture – the OCC values robust AML/KYC and risk management.
- Prepare for public scrutiny – your application may attract media attention, especially if you’re a crypto firm.
- Maintain open communication with OCC examiners – respond promptly to requests.
- Learn from precedent – study successful applications like Anchorage or Kraken’s Payward to understand expectations.
- Consider state charters first – some firms start with a state trust charter to build a track record before going federal.
Following these steps can help you navigate the OCC’s rigorous process and increase your chances of obtaining a national trust charter. Whether you’re a crypto exchange or a traditional financial firm, the charter offers a powerful way to expand your fiduciary services under a unified federal framework.