Foreword
In the late 1960s, Wall Street faced a seemingly insignificant problem. As securities trading became increasingly popular, trading activity surged, but the infrastructure supporting it remained outdated. Brokers still settled transactions by physically exchanging stock certificates. Messengers crisscrossed Manhattan, delivering envelopes. Back-office offices were piled high with forms. The surge in trading volume was so severe that the U.S. market had to halt trading every Wednesday for six consecutive months to allow firms time to process the backlog of paperwork.
This ultimately escalated into the infamous "paperwork crisis."

Better "errand runners" and more paper documents couldn't solve the problem.
... Therefore, in 1973, they replaced all liquid assets with Depository Trust Companies (DTCs). This company fixed securities and changed ownership transfers to bookkeeping updates rather than the handover of physical stock certificates. The modern U.S. securities market we see and hear today is the result of this decision, evolving through numerous iterations. Today, DTCs hold custody of over 1.4 million securities, valued at $87.1 trillion, including securities issued in the U.S. and over 130 other countries and regions. We see a similar narrative in financial history. When an asset class becomes large and popular enough, what sustains its growth is not merely bookkeeping strategies; the fundamental driving force is always trust. After the introduction of Depository Trust Companies (DTCs), ordinary investors no longer needed to worry about ownership, as trust in the central authority's ability to maintain records replaced the need for paper certificates. The same issue has arisen in the cryptocurrency space. Over the past two years, cryptocurrency has gained increasing appeal as a mainstream asset in the United States, driven by exchange-traded funds (ETFs) and other forms of investment, such as digital asset bonds. This development has spurred rapid action from back-office departments, much like the paperwork crisis of the 1960s gave rise to DTCs. The "paper" in cryptocurrency refers to the private key, which is more like a bearer instrument—whoever controls the private key controls the asset. This presents financial institutions with a familiar set of problems: operational control, asset segregation, auditability, bankruptcy issues, governance, and the fact that a lost private key is a permanent loss. Now, a new trust mechanism is being built around these challenges: the trust banking license. In today's article, I will explain why so many companies are vying for cryptocurrency custodian bank licenses. The Licensing Boom: In recent months, the Office of the Comptroller of the Currency (OCC) has been approving and processing a growing number of applications seeking to become national trust banks related to digital asset custody and stablecoin infrastructure. On December 12, 2025, the OCC conditionally approved five such applications, including Circle's first national digital currency bank, Ripple's national trust bank, and conversion applications from BitGo, Fidelity Digital Assets, and Paxos. Subsequently, Stripe's cryptocurrency arm Bridge and Crypto.com received preliminary approval from the OCC in February 2026. The queue isn't limited to native cryptocurrency companies. Last week, Morgan Stanley, the world's largest wealth management company, applied to establish a trust bank called the Morgan Stanley Digital Trust National Association. Do you know what these applications have in common? They aren't lining up to become ordinary banks, offering deposit and loan services. Unlike ordinary banks, these national trust banks cannot accept deposits or make loans, and they are not insured by the Federal Deposit Insurance Corporation (FDIC). They are applying to provide custody, safekeeping, and trust management services. You can think of it as a bookkeeping service specifically for crypto assets. I think this is one of the clearest signs that cryptocurrencies are changing the way traditional financial institutions operate, while the rest of the world is busy focusing on the volatility of cryptocurrency prices. Banking licenses may sound dry and boring, but like many other financial infrastructure innovations, they bring us back to the lessons the financial world learned from the paperwork crisis. This also underscores the core of cryptocurrency mainstreaming: custody and control. The surge in license applications is closely related to the recent clarification by the Office of the Comptroller of the Currency (OCC) regarding the authority of national banks in cryptocurrency-related custody businesses. In May 2025, the OCC confirmed that national banks and federal savings associations can buy and sell their custodial assets according to customer instructions. In December 2025, the agency also confirmed that banks can act as intermediaries to conduct “risk-free principal” cryptocurrency transactions without holding inventory. Last week, on February 27, 2026, the Office of the Comptroller of the Currency (OCC) clarified that, starting April 1, 2026, National Trust Banks can engage in non-trustee activities beyond their narrow fiduciary responsibilities. Why is this important? It's crucial if you're a company that provides custody, settlement, reserve management, and related services. We've seen similar situations in the financial world. In the early 2010s, new types of banks emerged as a wave of fintech companies developed apps based on partner banks. While these apps made banking more convenient, they also presented problems. Despite having a user interface, the partner bank still controlled deposits, infrastructure, and regulatory authority. In the event of a problem, responsibility was spread across multiple entities, creating confusion. The approach then was similar to what we're seeing now in the cryptocurrency space: managing risk and reward. In 2016, the Office of the Comptroller of the Currency (OCC) began exploring issuing special-purpose national banking licenses to fintech companies. Two years later, the OCC began accepting license applications from non-depository fintech companies engaged in core banking activities. Despite court rejections of the possibility of issuing banking licenses to non-depository institutions, fintech companies continued to reduce their reliance on partner banks. Subsequently, a few fintech companies transformed into full-service banks through traditional, more cumbersome pathways (sometimes including acquisitions). Varo, initially a fintech company, obtained a full-service national banking license in 2020. Jiko transformed into a bank through the acquisition of a small national bank. SoFi received conditional approval in 2022 to become a full-service national bank through the acquisition of an existing national bank. The national trust bank license boom we're seeing today follows a similar pattern, except this time, Washington is also developing a new set of safeguards for digital assets. The legislative context behind all these developments makes it clearer why companies applying for national trust bank licenses are not just pursuing custody services in the digital asset space. In July 2025, US President Donald Trump signed the GENIUS Act, establishing a federal framework for payments of stablecoins. Several companies seeking trust bank structures have made it clear that they plan to conduct stablecoin and related reserve business within the federal regulatory framework provided by the Act. Bridge and Circle both mentioned this in their respective announcements. This answers the first level of the "why now" question. The clarification of regulatory policies has opened up new value chains for existing businesses, including traditional companies and cryptocurrency-native businesses, enabling them to expand their operations. The second level concerns market structure. Institutional investment in cryptocurrencies has shifted to vehicles similar to traditional financial products, such as ETFs, funds, and managed accounts. These vehicles require custodian institutions that meet legal and operational requirements. If you think centralized cryptocurrency investment is no longer in demand, you're sorely mistaken. The current development of the cryptocurrency ETF infrastructure is ample proof of this. In April 2025, BlackRock, the world's largest asset and crypto fund manager, added Anchorage Digital Bank as a Bitcoin custodian, in addition to Coinbase, its existing partner in the iShares Bitcoin Trust. BlackRock stated that this move was part of "ongoing risk management" aimed at meeting the growing demand from retail and institutional investors. What value do financial giants like Morgan Stanley, with a market capitalization of $9 trillion, see in these charters? One recent indication came from a fireside chat at the "Enterprise Bitcoin" conference less than two weeks ago. At the time, Phong Le, CEO of Strategy (formerly MicroStrategy), stated, "If anyone can help the world 'take the orange pill,' it's Morgan Stanley." Amy Oldenburg, Head of Digital Asset Strategy at Morgan Stanley, responded, "That's probably accurate." What changes have occurred? Once you connect these developments, the trust license boom no longer seems like a cryptocurrency story, but rather an evolution we've seen in the development of DTCs. As cryptocurrencies gradually evolve into a financial asset, retail and institutional investors need a place to store their private keys, and this place must be accredited by lawyers, auditors, and regulators. Establishing national trust bank licenses is one way to address this issue on a large scale. Next, let's consider the economics of this business line. Custody services seem to have low fees. Starting in Q1 2025, Coinbase stopped disclosing custody fee revenue as a separate item, instead including it in "Other Subscription and Services Revenue." However, the complexity of the custody business goes far beyond what it appears to be. Whoever controls custody controls the collateral, which in turn determines these institutions' financing capabilities. Financing determines leverage, which in turn determines trading volume. Ultimately, trading volume determines revenue. In 2025, global securities lending revenue will reach $15.3 billion, with outstanding loans exceeding $4 trillion. Custody giant State Street reported total revenue of $13.94 billion in 2025. Of this, service revenue accounted for approximately 40% ($5.32 billion), including services such as custody, accounting and fund management, record keeping, and client reporting. Therefore, while custody services alone may not generate substantial revenue, ancillary services surrounding custody can create a recurring revenue stream. DTCs have become indispensable because they enable the market to scale without being overwhelmed by cumbersome paperwork. Today, DTCs have evolved into comprehensive systems that go far beyond custody; they also offer settlement services, handle corporate actions, and support underwriting. This has formed a complete ecosystem built around updating ownership records. Obtaining a cryptocurrency custody license can offer similar benefits to these applicants. In addition to becoming a vault, they can provide authorized ledger interfaces. This license enables these institutions to provide credibility to their clients in recording, segregating, transferring, and auditing ownership of digital assets. They don't need to be deposit-taking banks to achieve this through a leaner balance sheet and a more focused approach. However, trust licenses also have many critics. Traditional banking proponents argue that these licenses can serve as "backdoors" into the banking system without requiring deposit-taking or the same broad public obligations. Banks are debating the boundaries. Despite the ongoing debate, regulatory change has begun. The conditional approval from the Office of the Comptroller of the Currency (OCC) may not be final, but it sends an important message: while cryptocurrencies adhere to the concept of self-custody, their scale is large enough that the importance of back-office operations is becoming increasingly apparent. I believe it would be a mistake for industry insiders to call the surge in trust bank license applications a phenomenon within the cryptocurrency industry. It's more like a natural evolution of market participants seeking to create value by addressing industry inefficiencies.