The Trump family is one step closer to controlling their own stablecoin infrastructure. The Office of the Comptroller of the Currency (OCC) has just granted conditional approval to establish World Liberty Trust Company, a national trust bank affiliated with World Liberty Financial. The filing from earlier this year gives them an 18-month deadline to begin operations from a new headquarters in Bay Harbor Islands, Florida.
The primary function of this entity directly targets one goal: taking over BitGo’s role as the exclusive issuer and custodian of the USD1 stablecoin. Through this trust bank, the company will provide digital asset custody services as a fiduciary and facilitate the conversion of approved stablecoins into USD1. However, this status comes with strict limitations. The trust bank cannot accept public deposits, is not covered by FDIC insurance, and does not have access to a Federal Reserve master account.
Operating Outside Traditional Status
World Liberty Trust Company is fully committed to operating outside the definition of a conventional bank regulated under the Bank Holding Company Act. As a condition of operation, the OCC has mandated a minimum initial capital requirement of $20 million and full compliance with the GENIUS Act, a stablecoin law passed last year. Control has been handed to Zachary Witkoff, co-founder of World Liberty, who holds dual roles as organizer, director, and president.
The granting of crypto charters by the OCC is not new; entities like Circle, Ripple, Paxos, Fidelity, and BitGo have already secured them. However, the direct affiliation with the Trump family has thrust this case into the public spotlight, as evidenced by a tweet from WatcherGuru that garnered over 9,400 likes and 1,300 retweets in a short period of time.
Conflicts of Interest Rejected by Regulators
A wave of opposition emerged immediately, led in part by Senator Elizabeth Warren. The vocal crypto industry critic called the OCC charter illegal for allowing the entity to function like a bank while avoiding consumer protection safety nets.
Beyond the legality issues, the approval process was clouded by objections regarding multiple layers of conflicts of interest - ranging from the involvement of the president’s family and the Witkoff family to the inclusion of Emirati investors in World Liberty’s structure. Concerns regarding violations of the Emoluments Clause were raised. However, the OCC brushed aside these objections, arguing that they fell outside the scope of their evaluation. On the other hand, Eric Trump has signed a passivity agreement for an investment entity to smooth the path to approval.
Wresting control of USD1 from BitGo is a tangible step toward full control over their financial ecosystem. The next challenge shifts from the regulators’ desks to the open market: whether this new entity can convince the market without the cushion of traditional deposit insurance.
Reported from Decrypt.
Read also: What is DeFi (Decentralized Finance)?
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
