World Liberty Financial has received a conditional OCC approval.
The stablecoin issuer for the USD1 stablecoin has officially received the first approval from the OCC to get a national trust bank charter in the U.S., according to a press release.
In turn, such a license would see a new entity form named World Liberty Trust Company, National Association.
World Liberty Joins Others
World Liberty is now joining other digital asset firms who received the preliminary conditional approval letter.
Augustus received an early approval in July, while Agora (stablecoin issuer for AUSD) submitted an application back in May.
Coinbase similarly received a conditional approval before the Senate Banking committee passed the Clarity Act, while Bridge, Ripple, Paxos, Circle, and Erebor got theirs a few months earlier.
World Liberty is still expected to meet certain “regulatory and policy requirements” as per the OCC’s Corporate Decision Letter 1835 and similarly to those sent out to other applicants.
These refer to 7 conditions and 11 requirements, including: being compliant to Genius Act, not deviating its operations, having $20M in Eligible Liquid Assets and 180 days’ of operating capital, implementing strict auditing practices and direct communication with the OCC on leadership changes, among others.
USD1 Custody and Issuance
World Liberty Trust Company will be able to provide custody services for USD1 stablecoin and other certain digital assets upon full approval.
However, this is only intended for servicing custody clients using payment stablecoins and is not a direct-to-retail banking depository institution.
This means that its charter does not extend to accepting or operating traditional retail deposit-based banking activities, or lending those deposits out back to individuals.
In particular, it will be also able to provide stablecoin conversion between other stablecoins and USD1, although again this is only intended for “custody customers”.
Interestingly, the OCC letter states that with a new entity, World Liberty expects to take over direct stablecoin issuance and reserve management of USD1 over from BitGo.
BitGo is responsible for USD1 issuance, custody, and attestation reports. It also does the same for FYUSD and SofiUSD, and recently launched a minting and redemption product line.
World Liberty had $4.6B of USD1 stablecoin reserves in available assets per BitGo’s June report.
Stablecoins and FDIC Insurance
In the OCC letter, there is a section dedicated towards comments.
Therein, the OCC makes it clear that stablecoins are not qualified for FDIC (Federal Deposit Insurance Corporation) Insurance, which was designed for banks holding consumer deposits.
It cites a phrase from the U.S. Genius Act that “stablecoins shall not be subject to deposit insurance by the FDIC”. This also actively supports the FDIC’s recent Genius Act rulemaking proposals.
A number of objections were also filed against World Liberty receiving a national charter.
These were specific in scope, including: association with the President Trump family, divestment of WLFI tokens and questions on ownership structure, Fed Master Account restriction, additional Bank Holding Company (BHC) Act requirements, and more.
However, the OCC found these were “not grounds for denial”.
