In brief

• World Liberty Financial has applied to form a national trust bank overseen by the OCC.
• The charter would cover issuance, custody, and conversion of the USD1 stablecoin.
• Several other crypto firms were recently granted a charter following years without approvals.

World Liberty Financial, a crypto venture linked to President Donald Trump's family, has filed an application with the U.S. Office of the Comptroller of the Currency to form a national trust bank.

The proposal seeks to place its USD1 stablecoin under direct federal supervision in a regulatory category that has recently admitted several other crypto-linked firms.

If approved, the proposed entity named as World Liberty Trust Company, will be allowed to “take over the issuance and redemption of USD1, offer conversion services from other major stablecoins into USD1, offer custody services for fiat and major stablecoins, and perform the reserve management for the assets backing outstanding USD1,” Mack McCain, general counsel of World Liberty Financial, and proposed trust officer for WLTC, overseeing fiduciary operations, told Decrypt.

Stablecoins are cryptocurrencies designed to track the value of a reference asset, most commonly the U.S. dollar, and in some cases other currencies or commodities, to enable price-stable digital payments and settlement.

“We want to do all of this in a highly regulated, transparent manner,” McCain added.

For years, Anchorage Digital was the only digital asset company to have secured one, according to the regulator, which supervises about 60 national trust banks. The federal charter was given conditional approval in 2021.

However, just last month, the regulator granted federal charters to USDC issuer Circle's First National Digital Currency Bank and Ripple National Trust Bank. Furthermore, it granted conditional approval to BitGo, Fidelity Digital Assets, and Paxos Trust Company to convert their state charters into federal ones. Additionally, the Trump-allied startup Erebor was granted a conditional charter in October for its upcoming crypto bank.

World Liberty’s filing targets a trust charter that would allow custody and settlement functions without lending or insured deposits.

A needed upgrade

World Liberty’s prospects for the charter appear to be a “structural upgrade” that advances its stablecoin from being “a trading instrument to a settlement instrument,” Chris Loeffler, CEO of Nasdaq-listed digital asset management platform Caliber, told Decrypt.

“As more people and institutions utilize digital currencies to transact, those transactions need an ability to be settled between parties without the risk of the currency being used fluctuating in value, and this charter offers a federally regulated structure to make that possible,” Loeffler said.

Stablecoin issuers like World Liberty use a structure designed for state-licensed entities, but those “have regulatory friction between the states, and a partnership with an existing financial institution,” he explained, adding that such a condition “reduces the profitability of the issuer and introduces counterparty risk.”

“Neither of these is very appealing for a stablecoin issuer seeking to become ubiquitous with the infrastructure needed for more of TradFi to do business in the world of DeFi,” Loeffler noted.

The move could also be “a signal to what direction stablecoin legislation and regulation also goes in,” he said. “It will be a niche option to the extent that the federal government meters out how many of these charters can be obtained.”

As a decentralized finance project, World Liberty Financial operates on public blockchain networks and has developed token-based financial products centered on its USD1 stablecoin, which it rolled out in March last year, alongside WLFI, its governance token.

Despite its efforts, the venture has drawn scrutiny over its ownership structure and financial disclosures.

Filings tied to the token sale show that a Trump-affiliated entity was entitled to a significant share of proceeds and later reduced its ownership stake as a Senate inquiry examined Trump’s crypto ties.

Lawmakers have also questioned USD1’s involvement in politically sensitive moves and its expansion on major exchanges, allegations that the companies involved have denied.

Editor's note: This story was updated after publication to correct inaccurate information about crypto-related firms that have been granted national trust charters.

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