World Liberty Financial Receives Preliminary Approval for National Trust Bank
World Liberty Financial has been granted preliminary conditional approval by the Office of the Comptroller of the Currency (OCC) to create a national trust bank named World Liberty Trust Company, National Association. This bank, based in Bay Harbor Islands, Florida, will be a subsidiary of WLTC Holdings LLC, a Delaware-registered entity.
Although the approval allows World Liberty to begin the organizational aspect of the bank, it is not yet permitted to start operations; the OCC requires the company to fulfill certain pre-opening conditions before it can legally conduct business.
Conditions for Approval
The OCC highlighted that the approval remains contingent and can undergo changes or be revoked if significant new information comes to the forefront. To move forward, World Liberty Trust must:
- Apply for shares in a Federal Reserve Bank
- Ensure it has at least $20 million in eligible capital
- Receive final confirmation from the OCC that it meets all pre-opening criteria
Business Model and Services
Under its intended business model, this trust bank aims to issue a dollar-pegged stablecoin, named USD1, designed specifically for institutional clients. It will also handle reserve management and provide custody services, allowing clients to convert approved stablecoins into USD1 using their assets held at the bank.
Notably, World Liberty Trust will not engage in activities typical of a conventional commercial bank; its operations will be restricted to trust and custody services, reserve management, and related payment services, rather than general retail banking or lending.
Regulatory Context
The OCC, citing the National Bank Act and the GENIUS Act, stated that national trust banks can provide digital asset custody services and can issue payment stablecoins, a move aligned with modern banking trends. As of March 31, data showed that uninsured national trust banks managed a substantial total of $7.2 trillion in assets, with $1.7 trillion attributed to custody and safekeeping accounts.
If it receives full authorization, World Liberty Trust will replace BitGo Bank & Trust as the official issuer and custodian for USD1, taking over the reserve assets tied to the token. The OCC has granted exceptions related to certain federal rules that govern bank transactions with their affiliates, streamlining the process for World Liberty Trust.
Political Scrutiny and Concerns
World Liberty Trust’s establishment comes amidst political scrutiny due to its connections to Donald Trump and his family. Specifically, a Trump-affiliated entity is reported to control approximately 38% of World Liberty’s equity. Questions have arisen regarding the independence of the OCC’s approval process, particularly after Senator Elizabeth Warren urged the agency to delay its review until any potential conflicts of interest were resolved.
The OCC clarified that it adhered to statutory and ethical duties in processing the application. Their review concluded that career officials and nonpolitical examiners would oversee the proposed bank’s operations.
Facing pushback, Warren and a group of other senators have since proposed legislation aimed at preventing any president and closely related family members from holding banking interests. The proposed “Ending Presidential Corruption in Banking Act” would require rigorous review of banking applications approved during the tenure of individuals identified in the bill.
Foreign Investment and Governance
Further complicating matters, World Liberty’s recent investment from an Abu Dhabi company, linked to the UAE’s National Security Adviser, has sparked additional congressional inquiries. Some senators have questioned whether this foreign investment could have influenced U.S. policies regarding arms sales to the UAE.
In response to concerns surrounding foreign influence, the OCC indicated that the foreign entities involved are not the principal shareholders and have committed to not interfering in the bank’s governance or operations. These measures were established to help mitigate apprehensions regarding potential conflicts of interest, ensuring that governance remains unaffected by external pressures.
Conclusion
In summary, as World Liberty undergoes the process of establishing a national trust bank focused on digital assets and stablecoins, it faces both regulatory challenges and political scrutiny. Still, it aims to operate under federal oversight, streamlining operations for clients engaged in using the USD1 stablecoin, and preparing to navigate the complex interplay of finance and governance.
