Banking and Finance Law Daily Wrap Up, FINANCIAL TECHNOLOGY—Banking, community groups oppose Payward national trust charter application, (Jun 9, 2026)

By Shashi Kant, BALLB, LLM

The groups argue that the proposed Kraken-affiliated national trust company raises legal, transparency, safety-and-soundness, affiliate-transaction, and consumer-protection concerns.

The Bank Policy Institute (BPI), National Community Reinvestment Coalition (NCRC), and Independent Community Bankers of America (ICBA) have filed comments opposing Payward, Inc.’s application to organize Payward National Trust Company as a national trust bank supervised by the Office of the Comptroller of the Currency. The proposed trust company would be a Kraken-affiliated, de novo, non-insured national trust company headquartered in New York. The groups argue that the application should not be approved without further public disclosure, legal analysis, and review of the proposed institution’s digital-asset activities, governance, risk controls, and affiliate relationships.

Payward application. Payward, Inc. submitted its application to the OCC, seeking approval to organize and operate Payward National Trust Company. According to the application, Payward’s primary business is the operation of an online digital asset platform marketed under the Kraken brand that enables clients to buy and sell digital assets. Payward affiliates also offer derivatives trading on digital assets, tokenized equities or xStocks, brokerage access to U.S. equities, margin for spot digital-asset trading, benchmark administration, and staking services. The application states that Payward National Trust Company would provide services primarily related to digital assets. Its initial business activities would focus on custody services for digital assets, including safekeeping, recordkeeping, and settlement services for institutional and eligible individual clients. The application also states that the proposed trust company would support staking, trading activities, collateral management, and other activities, either directly or indirectly through a Payward affiliate. Payward said the institution would not directly offer traditional retail banking products, such as deposit accounts or commercial lending, and would not engage in proprietary trading for its own account.

Prior ICBA concerns. The ICBA earlier raised concerns that Kraken’s national trust charter application should be evaluated together with broader crypto-related policy developments, including stablecoins and access to Federal Reserve services. ICBA argued that national trust charters, especially after OCC Interpretive Letter 1176, may allow crypto and fintech firms to engage in custody- and payments-related activities resembling core banking functions without equivalent prudential safeguards. ICBA also urged the OCC to pause consideration of Kraken’s charter application, reconsider Interpretive Letter 1176, and conduct formal rulemaking on the scope of national trust charters (see Banking and Finance Law Daily, May 13, 2026).

ICBA letter. ICBA urged the OCC to deny the application. It argued that the application fails to satisfy statutory and regulatory requirements for a national bank charter and identifies five grounds for denial: poor compliance and control functions, concentration risk, affiliate-transaction issues, lack of independence, and absence of an orderly resolution plan. ICBA said Payward National Trust Company would rely on Payward’s infrastructure, risk management framework, and personnel, while Payward’s recent enforcement record raises questions about the controls on which the proposed trust company would rely. ICBA also argued that the proposed institution would be concentrated in digital assets, with no traditional banking business to offset a downturn, and that its parent would be exposed to the same market segment. ICBA raised affiliate-transaction and governance concerns. The group said the proposed business model depends on transactions with Payward affiliates and on support for services offered by those affiliates. ICBA argued that the application does not show that the proposed trust company could keep those dealings within legal limits or manage conflicts. ICBA also said only two of six proposed directors would be outside directors, leaving the board controlled by Payward insiders.

BPI comments. BPI told the OCC that approval of Payward’s application could exceed the OCC’s authority under 12 U.S.C. § 27(a), which BPI said limits national trust bank charters to institutions predominantly engaged in trust and fiduciary activities. BPI also argued that approval could permit the national trust charter to be used in a new manner that may increase risks to the financial system and create an uneven playing field for traditional federal- and state-chartered banks. BPI said the public record was too limited to allow meaningful comment. According to BPI, the publicly available application contains only a brief description of the proposed trust company and its activities, while the business plan and many other materials are confidential.

BPI asked the OCC to confirm several matters before taking action. Among other things, BPI asked the agency to confirm that Payward National Trust Company would not issue stablecoins; would actually engage in fiduciary activities within the meaning of the National Bank Act; would not hold customer funds as liabilities on its balance sheet except for trust deposits; would not use custody activity as a means to indirectly engage in deposit-taking, payments, or lending; would maintain sufficient capital; would address affiliate-transaction issues under Sections 23A and 23B of the Federal Reserve Act; and, if necessary, would register with the Securities and Exchange Commission as a broker-dealer or conform its activities to Regulation R.

NCRC opposition.NCRC said Payward, doing business as Kraken, seeks a national trust bank charter to provide digital-asset services including custody, safekeeping, recordkeeping, settlement, staking, trading support, and collateral management. NCRC opposed national trust charters for companies engaged in cryptocurrency activities, arguing that such charters stretch the trust-bank charter beyond its statutory purpose and encourage regulatory arbitrage. NCRC argued that granting the charter would allow a cryptocurrency exchange to obtain the appearance of bank status while avoiding obligations that apply to full-service banks. According to NCRC, national trust banks are not subject to Community Reinvestment Act requirements, and a charter could give Payward/Kraken federal regulatory status without obligations to serve low- and moderate-income communities or meet local credit needs. NCRC also said the “national bank” label could create consumer confusion about protection for customer funds because the proposed entity would be non-insured.

Companies: Bank Policy Institute; Independent Community Bankers of America; Kraken Financial; National Community Reinvestment Coalition; Payward National Trust Company

RegulatoryActivity: BankingOperations FinancialIntermediaries FinTech NewYorkNews