State Trust Charters for Crypto Custody Face a Federal Challenge
Banking groups argue the charters grant national reach without national supervision. Custodians say the model has worked for a decade.
A coalition of banking trade groups has asked federal regulators to clarify the limits of state-issued trust charters used by several large digital asset custodians, arguing that the charters function as a national banking licence without commensurate oversight.
Custodians counter that state trust supervision predates digital assets by a century, includes capital and fiduciary requirements, and has produced no material custody failure among charter holders to date.
The stakes are concrete. Exchange-traded product issuers rely on a small number of qualified custodians, and any restriction on charter powers would concentrate that already narrow bench further.
A federal response is not expected quickly. In the interim, several custodians have begun pursuing parallel federal applications as insurance rather than preference.
- custody
- trust charter
- banking
- regulation
About the author
Julian Thorne — Julian Thorne leads MyBunnyFarm's coverage of financial regulation, central bank digital currency programmes and cross-border enforcement. He has covered European financial rulemaking for eleven years, including the full passage of MiCA, and reads consultation papers so readers do not have to.
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Corrections to this report: corrections desk. Nothing in this article is investment advice.