Recent actions by national trust charters have sparked a wider debate about crypto regulation. Senator Elizabeth Warren questioned the Office of the Comptroller of the Currency (OCC) regarding its approvals of companies like Coinbase, Ripple, and Bitgo. Bitgo’s CEO, Mike Belshe, argued that their custody services keep client assets separate from the risks associated with lending.
Key Takeaways:
- Senator Warren’s scrutiny over OCC trust charters intensified as crypto custody regulation drew broader attention.
- Crypto custody protections remained central as Belshe said client assets stay segregated from lending activity.
- Belshe argued that trust banks and fractional reserve banks should be classified under clearer terminology.
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 examined several companies involved in digital currency, including Ripple National Trust Bank, Paxos Trust Company, 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 currently manage a variety of assets like art, precious metals, farmland, businesses, and digital credentials, according to Belshe. He believes digital assets can be handled within the existing legal framework for trusts. Bitgo, for example, has a trust charter from South Dakota dating back to 2018, and also operates with regulatory approval or licenses in several international locations including 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.
According to Belshe, banks face various regulations designed to manage different risks. These rules, including deposit insurance, capital requirements, and laws like the Community Reinvestment Act, oversee how banks handle depositor funds and make loans. Bitgo, however, operates differently. Its ‘one-for-one fiduciary custody’ model means it doesn’t borrow depositor money and lend it out, thus avoiding those traditional banking regulations.
Belshe argued:
“The asset class does not change the structure.”
In his final remarks, Belshe invited Warren to connect directly with Bitgo and its team. He explained that Bitgo had been actively seeking greater regulatory oversight for the past ten years and saw the OCC charter as a way to strengthen, not avoid, that supervision. He also suggested using more precise language to distinguish between traditional banks that lend out most of their deposits and those that fully back their holdings with reserves.
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2026-05-21 02:28