On January 8, the OCC announced a notice of proposed rulemaking to amend its national bank chartering regulations to make clear that national trust companies can engage in non-fiduciary activities. According to the OCC, the proposal would neither expand nor contract its chartering authority under the National Bank Act.
The OCC explained that the proposal is intended to eliminate potential confusion created by regulatory language adopted in 2003, which was aimed at certain special purpose national banks but could be misread as limiting the permissible activities of national trust banks. The agency emphasized that it has never interpreted its regulations to restrict national trust banks from engaging in non-fiduciary activities related to trust company operations.
Commenters have 30 days to respond to the proposed rulemaking.
Putting It Into Practice: The OCC’s proposal adds important context to the agency’s longstanding interpretation that national trust banks may engage in non-fiduciary activities related to the operations of a trust company, including custody and safekeeping services, and that such banks are not subject to the core banking function requirements applicable to certain other special purpose banks. The proposal comes as fintech and crypto firms are increasingly applying for national trust bank charters to access a federal supervisory framework. The proposal signals the OCC’s increased flexibility with respect to firms focused on digital asset custody, settlement, or reserve management that are considering applying for a federal trust charter.