ICBA opposed PAYO Digital Bank’s application for a national trust charter, saying it has significant concerns regarding the applicant's business model as well as the broader policy considerations raised by the application.
Proposal Details: PAYO Digital Bank would be authorized to issue a proprietary U.S. dollar-pegged stablecoin (PAYO-USD) intended to comply with the GENIUS Act. PAYO proposes to send and receive third-party stablecoins, manage PAYO-USD reserves, provide a custodial wallet infrastructure, and offer on-ramp and off-ramp conversion services between stablecoins and local currencies.
ICBA View: In a letter to the OCC, ICBA urged the agency to deny the application or, at a minimum, defer action, saying:
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The proposed business model raises fundamental policy and supervisory concerns.
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The company's prior regulatory and compliance failures raise serious fitness-and-propriety concerns.
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The application risks regulatory arbitrage and creates an uneven playing field.
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There are significant financial stability and consumer protection concerns.
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Approving such an application would expand the federal banking perimeter without adequate guardrails.
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There has been insufficient public transparency and opportunity for meaningful comment during the application process.
ICBA Advocacy:
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ICBA this month objected to Morgan Stanley Digital Trust’s application to charter as a national trust bank, saying innovation must occur within a regulatory framework that preserves the safety and soundness of the banking system and ensures fair competition across the banking sector.
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After the OCC issued its final chartering rule for national trust banks, ICBA this month expressed significant concerns with chartering limited-purpose trust banks that engage substantially in non-fiduciary activities.
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Responding to a request for information on the rulemaking, ICBA last month called on the OCC to withdraw the proposed rule or reissue an amended proposal consistent with its statutory authority.
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ICBA recently expressed opposition to the OCC’s conditional approval of several national trust bank charter applications from nonbank fintechs, saying the OCC lacks statutory authority to expand trust powers under Interpretive Letter #1176.
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An Independent Banker article and ICBA blog post break down the influx of applications from nonbank fintech firms for national bank trust charters and the risks they pose to the financial system.