Block Seeks Federal Trust Bank Charter to Custody Bitcoin and Settle Stablecoins Nationwide
Table of Contents
You might want to know
Could a federally chartered trust bank enable broader, more consistent custody and settlement services for Bitcoin and stablecoins?
What operational structure and regulatory considerations would distinguish such a national trust that takes no deposits and makes no loans?
Main Topic
Block, the company known for Square and Cash App, has submitted an application to the Office of the Comptroller of the Currency (OCC) to form a national trust bank named Builders Bank & Trust. The proposed institution would be an uninsured, non‑depository trust bank: it would not accept customer deposits nor extend loans. Instead, its stated core functions are custody of Bitcoin and other digital assets, execution of customer buy and sell orders on a riskless principal basis, and providing stablecoin settlement services.
For roughly eight years, Block has operated digital asset services under a patchwork of more than 50 state money transmitter and virtual currency licenses. According to the application, Block processed about $10.7 billion in Bitcoin transactions in 2025 and served around two million monthly crypto users via Cash App by the second quarter. The company argues that a federal trust charter would permit these activities to scale within a consistent national framework, avoiding the compliance complexity that comes with multiple state regimes while aligning business operations under a single supervisory structure.
A key point: Builders Bank & Trust is proposed as a custody and settlement entity only—the bank would neither take deposits nor make loans, distinguishing it from traditional retail or commercial banks and placing emphasis on asset safekeeping and transaction settlement.
The planned headquarters for Builders Bank would be in Sioux Falls, South Dakota, and the bank would operate without branches. Block has proposed five directors, all residing outside South Dakota, and has requested that the OCC waive the usual residency requirement that a director live within 100 miles of the bank's location. Lee Woolley, Block's digital asset strategy lead and a former executive at Northern Trust and BNY Mellon, is named in the filing to serve as chairman and chief executive. Jack Dorsey is not listed as an organizer or executive; he is identified only as a co‑founder of Block in the filing.
Block's application follows a broader trend at the OCC: since late 2023 and into 2024 the OCC conditionally approved several crypto trust charters for firms such as Circle, Ripple, BitGo, Fidelity Digital Assets, and Paxos, with additional approvals and pending applications from other industry participants. These approaches reflect the OCC's amended chartering language, which now references the "operations of a trust company and activities related thereto" rather than narrowly defining "fiduciary activities," a change Block references in support of its application. The OCC, however, has not approved every applicant—some filings have been denied, illustrating that approval is not assured.
The proposed bank's stablecoin settlement function is noteworthy given public statements by some company principals expressing skepticism about stablecoins in general. Nevertheless, providing regulated on‑ and off‑ramps and settlement rails for stablecoins could support broader market infrastructure and interoperability between crypto assets and legacy financial systems.
Regulatory and political scrutiny remains a material consideration. Critics, including some members of Congress, have questioned whether the OCC has the statutory authority to grant trust charters to entities that do not perform traditional fiduciary services. Industry participants argue the OCC's chartering authority is appropriate for trust companies performing custody and related activities. Ultimately, any OCC approval will reflect its interpretation of the chartering rule and an assessment of the applicant's proposed operations, governance, and capital adequacy among other supervisory criteria.
Operationally, a non‑depository trust bank focused on custody and settlement must demonstrate robust safeguards: secure custody infrastructure for private keys, segregated asset accounting, clear operational controls for executing trades on a riskless principal basis, resilient settlement mechanisms for stablecoins, and strong anti‑money‑laundering and consumer protection frameworks. Because such an institution does not rely on deposit funding, the capital model and liquidity planning differ from traditional banks, and the OCC will evaluate whether the proposed capital and governance structures are sufficient to protect customers and maintain safety and soundness.
From a market perspective, centralized custody and regulated settlement can reduce fragmentation and deliver clearer compliance pathways for institutional and retail customers. A federal charter could lower the administrative burden of maintaining dozens of state licenses and provide a single supervisory point of contact. However, it also concentrates regulatory risk—if the OCC imposes conditions or limitations, the business model may need adaptation. Market participants and observers will watch closely for the OCC's response, given the implications for industry standards and competition among custody providers.
Key Insights Table
| Aspect | Description |
|---|---|
| Charter applied for | A national trust bank charter with the OCC for Builders Bank & Trust. |
| Business model | Uninsured, non‑depository custody of Bitcoin and digital assets; execution on a riskless principal basis; stablecoin settlement. |
| Geographic operations | Headquartered in Sioux Falls, South Dakota, with no branches; seeking waiver for director residency rule. |
| Regulatory context | Application follows OCC approvals for several crypto trust charters and uses amended OCC chartering language focused on trust operations. |
| Key metrics | Block reported approximately $10.7 billion in Bitcoin transaction volume in 2025 and about two million monthly crypto users on Cash App (Q2). |
Afterwards...
Looking forward, there are several technological and policy areas worth further exploration to support safe, scalable custody and settlement of digital assets. Continued investment in secure key management and multi‑party computation (MPC) techniques can reduce single‑point‑of‑failure risks for custody. Research into standardized settlement protocols for tokenized assets and interoperable stablecoin frameworks could lower friction between legacy financial systems and on‑chain settlement. Additionally, enhanced on‑chain analytics and compliance tooling will assist regulated entities in meeting anti‑money‑laundering and counter‑terrorist financing obligations without undermining user privacy.
On the regulatory side, clearer statutory guidance and coordinated supervision between federal and state authorities would help define boundaries for trust charters that serve non‑traditional fiduciary roles. Policymakers and regulators should consider frameworks that balance innovation with consumer and financial stability protections, including capital and disclosure requirements tailored to custody and settlement businesses. Understanding how to regulate custody and settlement distinctly from deposit taking and lending remains a key policy challenge.
In sum, Block's application to charter Builders Bank & Trust highlights the industry's push for a unified regulatory approach to custody and settlement of crypto assets. Whether the OCC grants approval will depend on the bank's proposed governance, capital, operational safeguards, and the broader legal interpretations of the OCC's chartering authority.