Key highlights:
- Rain filed an application on Monday to set up Rain National Trust Bank in New York.
- The bank would offer custody, stablecoin reserve management and issuance for institutional clients.
- The filing came days after a community bank group sued the OCC.
Rain, a company that provides payments tools for stablecoins, has applied for a national trust bank charter from the Office of the Comptroller of the Currency (OCC). The company said on Monday that it filed the application to create Rain National Trust Bank, which would be based in New York.
The application came three days after the Independent Community Bankers of America (ICBA) sued the OCC in federal court.
Rain seeks trust bank approval
The proposed bank, if approved, could serve institutional clients through three lines of business, according to Rain.
The first is custody. The bank would hold approved digital assets and US dollars as a fiduciary, and client property separate from the bank’s assets. The second is reserve management for approved stablecoin issuers. The third is issuing and redeeming dollar-backed stablecoins under the GENIUS Act.
Rain currently provides the technology behind stablecoin cards, wallets, and money transfer. The company said its partners, which serve millions of end users, hold different state licenses, outside custodians, and third-party stablecoin issuers. The application is seeking permission to bring these offerings into one federally supervised bank.
“The institutions building on Rain want the assets behind their programs held by a fiduciary that answers to a federal regulator,” Rain CEO and co-founder Farooq Malik said.
The charter would have some limits
The “Rain National Trust Bank” would not work like a normal consumer bank. The crypto firm said it would not accept deposits, offer checking or savings accounts, serve consumers or make commercial loans.
It would be an uninsured trust bank, which means its accounts would not carry deposit insurance from the Federal Deposit Insurance Corporation (FDIC).
Assets held in custody would stay listed as client assets, which means the bank would not carry debts. Rain also said the reserves backing a stablecoin the bank issues would not be pledged, lent or reused.
The structure is similar to other crypto-focused trust bank applications now moving through the OCC.
All of this comes at a difficult time for the OCC. The ICBA filed a case against the regulator on Friday, asking the court to cancel a rule on granting bank charters to crypto firms and to cancel the conditional charter given to Protego Holdings.
ICBA President Rebeca Romero Rainey said Congress never meant the charter to be used this way, and that trust charter holders do not provide the same services as normal banks.
Rain’s plan fits a part of the ICBA’s argument, since the company says its bank would not take deposits or make loans. The ICBA’s filing was centered on firms it called non-fiduciary, which do more than trust activities. Rain, however, said its proposed bank would act as a fiduciary custodian.
A busy field of crypto charters
The stablecoin firm’s application comes relatively “late to the party”. Over the past year, the OCC has approved trust charters for firms like Coinbase, Circle and Crypto.com. Crypto banks including Protego and Erebor have also been given the green light.
The OCC is also working to finish its rules under the GENIUS Act by November. Those rules will define how stablecoin issuers, including any trust bank, can operate with federal supervision.
Source:: Crypto Firm Rain Applies for U.S. Bank Charter Days After OCC Was Sued