Trust Me: Wise, Circle, Ripple Seek Charters, Master Account Access
Stripe Wins Bank Charter Approval, FTA Moves for Summary Judgment in Open Banking Standoff, CFPB Gives Navy Fed "Get Out of Jail Free Card," OCC Drops Disparate Impact Fair Lending Framework
Hey all, Jason here.
A slightly belated happy 4th of July — I hope my American readers have been able to enjoy a long weekend (despite the abomination referred to as the “Big Beautiful Bill” being signed into law…)
Tomorrow, I’ll be headed to London for a couple of days for meetings plus cohosting Oscilar’s RiskCon dinner on Tuesday.
If you’re in the area and want to attend the VIP event, ping me and, if there’s still space, I’ll see what I can do!
Trust Me: Wise, Circle, Ripple Seek Charters, Master Account Access
You’ve probably seen headlines in recent weeks about a rush of firms seeking “bank charters” — which is true! The change in administration has brought with it an emphasis on deregulation and supporting “innovation.”
The expected passage of the GENIUS Act, which provides a framework for regulating and licensing “payment stablecoins,” has also boosted interest in chartering new bank entities. It is expected that holding an existing charter will make the process of winning approval to issue stablecoins significantly faster and easier.
However, a slew of recent applications are not to form full-service commercial banks that hold deposits and make loans, but rather to charter national trust banks.
OCC-chartered national trust banks specialize in acting as a trustee, fiduciary, or custodian for assets. Because they generally do not hold deposits, trust banks typically are not FDIC insured.
Because they are relatively less complicated and risky compared to full-service commercial banks, the chartering process for national trust banks is less complex and time consuming.
Holding a national trust charter potentially enables firms to custody their own assets, rather than relying on a third-party custodian, something that is likely appealing to current or potential stablecoin issuers.
A national trust bank charter also would obviate the need for state-issued money transmission licenses (MTLs), which could significantly simplify a stablecoin issuer’s or payments firm’s regulatory overhead.
And perhaps the biggest prize: holding an OCC national trust charter makes firms eligible for direct access to Federal Reserve payment systems via a Fed master account — though it is worth emphasizing that, as uninsured institutions, national trusts are subject to a higher “Tier 2” or “Tier 3” review process and that the Fed retains broad discretion in approving or denying applications for master accounts.
Wise seeks to form Wise National Trust: international payments and remittances company Wise, formerly known as TransferWise, submitted an application to the OCC to charter Wise National Trust on June 16, 2025.
The public portion of application was published on June 30th and is available through the OCC’s Freedom of Information Act (FOIA) reading room.
While best known for cross-border payments, through various licenses and partnerships, depending on jurisdiction, Wise also offers multi-currency accounts and enables customers to invest their balances in money market funds.
Presently, Wise operates in the United States via its subsidiary, Wise US Inc., which holds MTLs in 48 states (Montana does not require an MTL, and Wise, as a foreign entity, is not currently eligible to apply for an MTL in Nevada.)
Although Wise is not a fully chartered bank in any jurisdiction in which it operates, it has won direct access to payment systems in the UK, where it was the first non-bank to connect to the country’s Faster Payments System in 2018, the European Union, Singapore, Australia, Hungary, the Philippines, Japan, and Brazil.
As a non-bank remittance service, Wise effectuates cross-border payments by maintaining accounts in the multitude of currencies and geographies that it supports.
In the actual process of making a cross-border payment, a sender typically would remit their local currency to Wise via a domestic payment rail, such as ACH in the US or SEPA in the Eurozone. Wise then pays out the equivalent of the value of the funds in the recipient’s currency via their local payment rails.
Having direct access to local payment systems in the countries it operates enables Wise to process pay-ins and pay-outs less expensively and more quickly.
Wise explicitly states that part of its motivation to form a national trust bank is in order to win direct access to US payment rails.
Per its application, Wise “will also seek membership with the Federal Reserve Bank of Dallas to obtain a Master Account and, as a result, establish a direct connection to the Federal Reserve payments systems.”
Wise’s application lays out how it believes a national trust bank would be accretive to its business model and operations, arguing that its bank entity:
would be subject to direct regulatory oversight from the OCC, which is appropriate for a payments company of Wise’s scope and scale;
could offer expanded fiduciary services on behalf of Trust Company clients, including MCA customers and Wise affiliates;
could issue virtual accounts to non-U.S. Wise affiliates, enabling non-U.S. customers of those affiliates to receive USD;
would be able to process USD payments for its customers and affiliates without reliance on third-party banks; and
would integrate into Federal Reserve payment systems with control over payment processing functions—reducing payment processing errors experienced via bank intermediaries and enabling full use of the Federal Reserve’s payment rails, including FedNow, without reliance on third-party banks’ participation.
Circle applies to charter First National Digital Currency Bank: Circle, the issuer of the USDC stablecoin, announced last week that it had officially submitted an application to the OCC to form First National Digital Currency Bank, a national trust bank. The public portion of the application is not yet available for review.
According to a statement from Circle, First National Digital Currency Bank, if approved, would “oversee the management” of the reserves that back USDC.
Circle would also be able to tap the trust bank in order to offer digital asset custody to institutional customers, the company’s statement said.
Securing a national trust charter would also pave the way to meeting expected requirements to be licensed as a stablecoin issuer under the GENIUS Act, Circle cofounder and CEO Jeremy Allaire said (spacing adjusted and emphasis added):
“Establishing a national digital currency trust bank of this kind marks a significant milestone in our goal to build an internet financial system that is transparent, efficient and accessible. By applying for a national trust charter, Circle is taking proactive steps to further strengthen our USDC infrastructure.
Further, we will align with emerging U.S. regulation for the issuance and operation of dollar-denominated payment stablecoins, which we believe can enhance the reach and resilience of the U.S. dollar, and support the development of crucial, market neutral infrastructure for the world’s leading institutions to build on.”
Although the charter, if approved, would enable Circle to leverage the entity to custody the reserve assets backing USDC, for now, there are no plans to change how the company manages its reserves, major news outlets have reported.
Circle hasn’t specified whether or not, if approved, First National Digital Currency Bank would seek membership in the Federal Reserve System or access to a Fed master account, though it feels like a safe assumption that it will do so.
Ripple seeks trust charter, Fed master account: not to be left out, Ripple, creator of the XRP token and issuer of the RLUSD stablecoin, also applied for a national trust bank charter last week. The public portion of Ripple’s application is not yet available.
Use of Ripple’s RLUSD, which launched just last December and has a total of about $469 million in circulation, is dwarfed by Circle’s USDC, with a market cap of approximately $62 billion. For comparison, Tether, an “offshore” stablecoin also known as USDT, has about 2.5x the scale of USDC, with a market cap of about $158 billion.
Ripple’s motivation for seeking a national trust charter is presumably largely similar to Circle’s: it will enable the company to custody the assets backing its RLUSD stablecoin without relying on a third-party custodian, the trust entity would be eligible for Fed master account access, and the OCC charter aligns with the likely requirements of the GENIUS Act.
Reporting also indicates that a subsidiary of Ripple, New York-chartered limited purpose trust company Standard Custody, applied for a Fed master account last week.
However, the Federal Reserve’s database of requests for master account access shows that Standard Custody actually applied on March 18th and its application remains “pending.”
No Guarantee of Fed Master Account Access
While obtaining an OCC national trust bank charter may make these firms eligible to apply for a Federal Reserve master account, they are by no means guaranteed to win access to one.
In a response to arguments the Fed should be more transparent and accountable in how it processes and evaluates applications for master accounts, the central bank adopted a set of guidelines and began publishing information on the disposition of such applications in late 2022.
The Fed’s guidelines setup a three-tiered system for eligible institutions.
Eligibility is defined primarily by the Federal Reserve Act as encompassing (1) members of the Federal Reserve System, and (2) entities that qualify as “depository institutions” under Section 19(b) of the Federal Reserve Act, as well as entities authorized by other federal statutes to maintain an account at a Federal Reserve Bank.
However, the definition of “depository institutions” in part 19(b) of the Federal Reserve Act includes “banks” that are eligible to apply for deposit insurance — creating some ambiguity in what types of entities are “eligible” for master accounts.
Beyond legal eligibility, the Fed has laid out five additional principles for evaluating master account applications:
Risks to Reserve banks—An account and services if provided to the firm “should not present or create undue credit, operational, settlement, cyber or other risks” to the granting Reserve bank.
Risks to the payment system—Firms requesting access also “should not present or create undue credit, liquidity, operational, settlement, cyber or other risks to the overall payment system.”
Risks to U.S. financial stability—The provision of an account and services “should not create undue risk to the stability of the U.S. financial system.”
Risks to overall economy—Such access also “should not create undue risk to the overall economy by facilitating activities such as money laundering, terrorism financing, fraud, cybercrimes, economic or trade sanctions violations or other illicit activities.”
Risks to implementing monetary policy—Finally, the provision of an account and services “should not adversely affect the Federal Reserve’s ability to implement monetary policy.”
If an entity is, in fact, eligible, the level of scrutiny applied to its application consistent with the Fed’s stated principles depends on the entity’s insured status and whether or not it is subject to federal prudential regulation:
Tier 1: federally-insured eligible institutions that are already subject to comprehensive regulation and oversight benefit from a streamlined review process, as detailed regulatory and financial information is already available and risks are well understood;
Tier 2: eligible institutions that are not federally insured but are subject to prudential regulation by a federal banking agency would face an “intermediate” level of review. Non-federally insured institutions with a federal charter, such as the OCC national trusts Circle, Ripple, and Wise seek to form, only qualify for Tier 2 if they are part of a holding company subject to Federal Reserve oversight.
Tier 3: eligible institutions that are not subject to federal prudential oversight at the institution or holding company level face the strictest and most extensive review.
It would appear that in order to be considered “eligible” institutions, Wise, Ripple, and Circle would need to have their newly formed national trust bank entities, if approved, join the Federal Reserve System.
Wise’s application explicitly states it intends to seek membership with the Federal Reserve Bank of Dallas. Circle’s and Ripple’s applications, when they become public, are likely to shed additional light on if and how they plan to approach seeking master account access.
Whether any eventual master account application is deemed to need a “Tier 2” or “Tier 3” review should depend on whether or not the national trust bank is held by a Federal Reserve-regulated holding company (Tier 2) or not (Tier 3).
Of 131 master account applications that were in progress when or received since the Fed began publishing data in 2022, 86 (66%) are Tier 1, three (2%) are Tier 2, and 36 (27%) are Tier 3 (though this includes some repeat applicants.) Six applicants were not yet assigned a Tier category, instead marked as “TBD.”
How an application is categorized has a significant impact on how long it takes to process: Tier 1 applications were decisioned in an average of about 94 calendar days, while Tier 3 applications took, on average, nearly 823 days, or more than two years.
All three of the Tier 2 applications continue to be marked as “pending,” even though two of the applications were submitted nearly three years ago, and the third was submitted all the way back in 2018.
The outcome is also heavily influenced by the tier of review: 74 of the 86 Tier 1 applications, or 86%, have been approved, with nine currently pending.
Only a single Tier 3 applicant, Numisma Bank, has received approval for a master account. Numisma has ties to former Federal Reserve vice chair for supervision Randal Quarles, leading some to suspect its master account review wasn’t exactly impartial.
Fifteen Tier 3 applicants have withdrawn their applications and three have been rejected outright, with 17 applications still pending a decision.
Tier 3 applicants that have withdrawn their requests or seen them denied include numerous Puerto Rican institutions, such as Tolomeo Bank International and Zenus Bank International, as well as crypto-related firms Paxos and, most memorably, Wyoming special purpose depository institution Custodia.
Custodia ultimately sued the Federal Reserve over the denial. Custodia lost its lawsuit and is currently appealing the decision to the U.S. Court of Appeals for the Tenth Circuit.
Stripe Wins Bank Charter Approval
Yes, Stripe now “is a bank,” or, more precisely, has a wholly-owned subsidiary that is a chartered bank.
The payment processor’s application to form a special-purpose bank, organized under Georgia’s authority to grant merchant acquirer limited purpose bank (MALPB) charters, was approved on June 30th, 2025, Fintech Business Weekly is the first to report.
Stripe’s application, submitted earlier this year, touched off some confusion, with a number of outlets and industry commentators declaring that Stripe had “become a bank,” which wasn't true at the time, and is only true in a very limited sense now that its MALPB charter has been approved.
The MALPB is a special-purpose non-depository charter designed specifically to allow merchant acquirers to operate without a separate bank partner. Merchant acquirers allow businesses to accept credit and debit card payments by handling the processing, authorization, clearing, settlement, and risk management of card payments and programs.
Stripe is just the third company to win such a charter, joining mega-merchant acquirer Fiserv, which also recently secured a MALPB charter, and payment processor Shift4, via its acquisition of Finaro (formerly known as Credorax).
Finaro/Credorax, however, never operationalized the charter, as the card networks refused to grant the small company principal member status in the schemes.
Securing a MALPB charter will presumably allow Stripe to become a principal member of card schemes (Visa, Mastercard), while giving the company more flexibility and control over its infrastructure.
The charter does not enable Stripe to offer bank accounts, hold deposits, or directly issue payment cards.
A Quick Programming Note From Jason
You may have noticed a variety of small tweaks and tests to the layout of the newsletter in recent weeks.
As a one-man show relentlessly focused on covering banking and fintech without fear or favor, I rely on a combination of subscription and sponsor revenue to make this newsletter possible. My strong preference and goal remain to make the majority, if not all, of Fintech Business Weekly freely accessible.
However, after more than four years and publishing nearly 350 newsletters and podcasts, I’ve learned a lot about the dynamics of the establishment and new media ecosystems, including the economic models of legacy and disruptor publications and how various stakeholders respond to incentives.
This is all a long-winded way of saying, I plan to continue testing and iterating the structure of the newsletter and my approach to monetization, including subscriber interest in exclusive paywalled content.
I hope that if you’ve find value in these weekly newsletters and podcasts, you’ll consider supporting Fintech Business Weekly by upgrading to a paid subscription if you haven’t already.