Payward, the parent company of Kraken, filed an application with the Office of the Comptroller of the Currency for a National Trust Company charter, positioning the exchange operator to establish federally regulated custody for digital assets. The filing, disclosed Friday, marks the seventh major crypto firm to pursue OCC approval under a framework that has drawn sharp criticism from traditional banking groups. Co-CEO Arjun Sethi framed the move as essential infrastructure, stating that “digital assets need robust and transparent regulation to grow responsibly.”
OCC Charter Path: What Payward Is Pursuing
A National Trust Company charter grants federal custody authority under OCC oversight, allowing operators to hold assets on behalf of institutional and individual clients without the full capital requirements of a traditional bank. Payward plans to leverage existing infrastructure from Kraken, its Wyoming Special Depository Institution license, and a Federal Reserve master account to support the application. The strategy positions Kraken Financial as a complementary banking service layer. This charter type has already been conditionally approved for six crypto firms, including Circle, Ripple, BitGo, Fidelity Digital Assets, Paxos, and Coinbase—which received conditional approval earlier last month. Payward’s filing reflects a deliberate regulatory strategy rather than a rush: Sethi noted the firm prioritizes “getting the framework right” over “being first.”
Banking Lobby Intensifies Pushback on OCC Approach
The Independent Community Bankers of America and allied groups have escalated opposition to OCC crypto approvals over the past year, arguing the regulator is stretching the historical definition of trust bank charters. Rebeca Romero Rainey, ICBA president and CEO, warned that “conditional approvals could endanger consumers and result in institutions that the OCC may not be able to manage effectively.” Critics specifically target stablecoin operators, claiming they could access the federal banking system without equivalent capital or regulatory requirements imposed on traditional banks. The tension reflects a fundamental disagreement over whether OCC has statutory authority to approve digital asset custodians under existing trust bank frameworks. These challenges have not blocked approvals but signal regulatory friction that could shape future conditions imposed on Payward’s application.
Custody Consolidation in a $2.64 Trillion Market
The OCC charter race reflects institutional demand for regulated digital asset custody. Crypto market capitalization stands at $2.64 trillion, with institutional adoption driving demand for compliant custody solutions. Each OCC approval strengthens a firm’s competitive moat by offering federal regulatory clarity—a credential traditional finance still treats as essential for large-scale adoption. Payward’s filing enters a crowded field, but the exchange’s existing user base and compliance infrastructure provide differentiation. Approval timelines remain unclear; Coinbase’s conditional approval process offers a rough benchmark, though each application faces distinct scrutiny based on firm-specific risk profiles and business models.
What Payward’s Next Steps Look Like
The OCC will conduct due diligence on Payward’s governance, capital adequacy, and risk management protocols. Expected approval timelines have not been disclosed. If approved, Payward would operate a federally regulated custody entity separate from Kraken’s exchange operations, creating structural compliance advantages. The charter does not guarantee profitability or market dominance—it signals institutional readiness and regulatory alignment. Payward’s application underscores a broader trend: major crypto infrastructure players are converging on traditional banking regulation as a path to mainstream adoption rather than challenging it.
