Block Seeks National Trust Bank Charter for Crypto Custody

Block, the payments company led by Jack Dorsey, has applied to the Office of the Comptroller of the Currency to charter a national trust bank dedicated to holding Bitcoin and stablecoins on behalf of customers. The proposed institution, Builders Bank & Trust, would operate as an uninsured trust bank under direct federal supervision, marking Block’s most concrete step yet toward folding its digital asset business into the traditional banking system.

The application, submitted Tuesday and reported September 9, 2026, would not create a conventional bank. Builders Bank & Trust would not accept deposits or issue loans. Instead, its charter would authorize custody and fiduciary services exclusively for digital assets, giving Block a regulated home for the Bitcoin and stablecoin holdings it manages for clients through its various platforms.

Why a Trust Bank, Not a Regular Bank

Understanding why Block wants this particular charter requires distinguishing it from a standard commercial bank. National trust banks chartered by the OCC operate under federal oversight but are barred from the deposit-taking and lending activities that define retail banking. Their narrow mandate is holding assets safely and administering them according to fiduciary duty, functions long associated with estate planning and institutional asset management, now increasingly extended to digital assets.

For a company like Block, whose reach spans consumer payments through Cash App and merchant services through Square, custody has become an operational necessity rather than an ancillary product. A federally chartered trust bank would let Block consolidate that custody function under a single national framework instead of navigating the patchwork of state-level trust and money-transmitter licenses that crypto firms have historically relied upon.

Lee Woolley, who leads Block’s digital asset strategy, has been named president and chief executive of the proposed bank. Woolley’s background includes work with Square Financial Services, the industrial bank Block already operates, which suggests the new entity would draw on institutional knowledge already tested inside the company rather than building a compliance function from scratch.

Part of a Broader Rush to the OCC

Block is not alone in pursuing this route. Ripple has already secured conditional approval for a similar national trust charter, while Circle and BitGo have received final approval. Kraken’s parent company, Payward, and the firm Zerohash have applications pending, placing Block within a cohort of crypto and fintech companies converging on the same regulatory strategy at roughly the same time.

That convergence says as much about the OCC’s posture as it does about any single applicant. A regulator that grants multiple trust charters to firms built around digital assets is signaling a willingness to bring custody activity that once sat outside conventional banking oversight into a supervised federal structure. For an industry that has spent years operating under fragmented state rules and, at times, outright regulatory ambiguity, a national charter offers something scarcer than convenience: a degree of institutional legitimacy that state licenses alone rarely confer.

The stakes of custody failures are not abstract. Recent events, including the collapse of the Tether-backed exchange Orionx after a custody breach, have underscored how quickly trust evaporates when asset-holding arrangements fail. A federally supervised trust charter does not eliminate operational risk, but it does impose a consistent examination regime that ad hoc custody arrangements lack.

What It Means for Block

The timing is notable. Block’s application follows a reported 40% reduction in staff, a restructuring that suggests the company is narrowing its focus even as it invests in new regulatory infrastructure. Pursuing a national trust charter while cutting headcount elsewhere points to a company betting that custody and fiduciary services for digital assets represent a durable, scalable line of business worth the cost of federal compliance, even as it trims other parts of its operations.

A charter would also position Block alongside firms like Circle, whose stablecoin business has faced its own scrutiny — Morgan Stanley recently downgraded Circle over USDC growth doubts — as another regulated counterparty in the stablecoin custody space. That matters because institutional clients, and increasingly retail platforms, are showing a preference for custodians with recognizable federal oversight rather than offshore or state-only licensing.

What Comes Next

The OCC’s review process for national trust charters typically involves public comment periods and can extend over many months, as seen with Ripple’s conditional approval. Readers should watch for whether the OCC opens Block’s application to public comment, how long the review takes relative to peer applications from Circle, BitGo, and Ripple, and whether Builders Bank & Trust’s eventual scope of services expands beyond Bitcoin and stablecoins. It is also worth monitoring how Block integrates Woolley’s team into any approved structure, and whether other Block products, including its Bitcoin-related ventures, shift custody arrangements toward the new entity once operational. Broader self-custody concerns, highlighted by incidents such as the Coldcard wallet hack that rattled confidence in self-custody, may also influence how quickly institutional and retail users migrate toward federally supervised custodians.

Source: Cointelegraph

This content is for informational purposes only and does not constitute financial or investment advice.