WLFI applies for a license from the U.S. National Trust Bank, sparking regulatory concerns over the crypto banking process

Recently, the US cryptocurrency industry has reignited discussions on regulation. World Liberty Financial (WLFI) announced that its affiliated entity, WLTC Holdings LLC, has officially submitted an application to the Office of the Comptroller of the Currency (OCC) to establish a national trust bank, World Liberty Trust Company. This move makes WLFI the latest crypto company to join the “National Trust Bank License” application queue and is seen as a key milestone for stablecoins and crypto finance moving toward a federal compliance framework.

According to disclosed information, the national trust bank license applied for by WLFI will primarily serve stablecoin-related businesses. Unlike traditional commercial banks, national trust banks typically do not accept public deposits or directly issue loans but focus on asset custody, settlement, and trust services. Such licenses allow institutions to operate under a unified federal regulatory framework, avoiding the compliance costs and complexities associated with applying for licenses in each state. WLFI stated that the relevant institutions will comply with the GENIUS Act and implement anti-money laundering, sanctions screening, and cybersecurity requirements. Customer assets will be managed separately, with reserves held by independent custodians.

However, this move has sparked noticeable concerns within the banking industry. Several traditional banks and industry organizations have pointed out that the national trust bank license could be used by some crypto companies as a tool for “regulatory arbitrage.” Although these entities obtain a federal identity similar to banks in form, they are not required to fully adhere to the capital adequacy, liquidity management, and systemic risk control requirements faced by traditional banks. This asymmetric regulation is believed to potentially weaken consumer protections and amplify financial risks.

Rebeca Romero Rainey, head of the Independent Community Bankers of America, publicly warned that the OCC has recently conditionally approved multiple national trust bank licenses, expanding the scope of this license and deviating from its original legal and historical positioning. If these institutions encounter operational issues, regulators may lack clear and orderly resolution pathways. Additionally, national trust banks are not automatically covered by the Federal Deposit Insurance Corporation (FDIC), meaning customer assets could face higher risks in extreme scenarios.

In terms of regulatory pace, the OCC typically takes 12 to 18 months to review such applications, so the outcome for WLFI’s license is unlikely to be finalized in the short term. Overall, this wave of crypto companies applying for national trust bank licenses signifies that stablecoins and crypto finance are accelerating their integration into traditional financial frameworks. However, how to balance innovation with risk control remains a core challenge for the US regulatory system.