Rain National Trust Bank Application
Rain, a provider of infrastructure for stablecoin payments, is making waves by applying to establish Rain National Trust Bank, which would be headquartered in New York. This move aligns with a growing trend among cryptocurrency firms seeking to secure federal trust charters in the United States, particularly over the past year.
Application Details
In a statement released on Monday, Rain announced that it had submitted its application to the Office of the Comptroller of the Currency (OCC). Should their application receive approval, the new bank plans to offer fiduciary custody services for digital assets and US currency specifically aimed at institutional clients. Additionally, Rain envisions providing reserve management for licensed stablecoin issuers and plans to issue and redeem stablecoins pegged to the dollar under the GENIUS Act. The leadership of the proposed bank will be headed by Brandon Soto, who previously served as CFO for Square Financial Services, pending regulatory review.
Industry Reactions
Rain’s CEO and co-founder Farooq Malik emphasized the importance of fiduciaries for institutions utilizing the services offered by Rain, highlighting the demand for oversight from a federal regulator.
However, this surge in interest for national trust bank charters has not gone unnoticed. Community banks are pushing back against the OCC; the Independent Community Bankers of America (ICBA) filed a lawsuit contesting the OCC’s authority in granting non-depository trust banks extensive powers, which they argue could allow these entities to engage in risky practices with insufficient oversight.
This lawsuit, lodged in the US District Court for the District of Columbia, specifically targets the National Bank Chartering final rule and an interpretive letter from 2021, asserting that these regulations enable crypto companies to bypass traditional, stricter banking regulations. The ICBA claims this gives crypto trust banks an unfair advantage over community banks and could mislead consumers into believing their funds are federally insured.
The ICBA is seeking a judicial review to invalidate the OCC’s recent chartering practices and its previous interpretive letter, along with a request to halt any future charters based on these guidelines. In response, the Crypto Council for Innovation has described the ICBA’s lawsuit as an attempt to hinder technological progress in the finance sector.
Current Landscape
Since the OCC began approving trust banks, it is reported that at least 21 such banks have been authorized—over half of which are tied to cryptocurrency ventures.
As the dynamics between traditional banking institutions and innovative crypto companies continue to evolve, the debate surrounding regulatory frameworks remains heated, with the outcome poised to impact the future of both sectors significantly.
