Dive Brief:
- The Office of the Comptroller of the Currency (OCC) granted conditional approval for Seattle-based Protego Trust Co.'s Washington state trust charter to be converted to a national one, the regulator announced Friday.
- Protego has 18 months to meet the terms of its conditional approval, which include application for membership in the Federal Reserve System. The company must also buy adequate bond coverage, according to the agreement.
- Protego intends to provide custody services for its clients' Bitcoin and Ethereum assets — with additional cryptocurrencies expected after launch. Protego plans to eventually provide a client-to-client lending and trading platform, but the company won't make direct loans or take deposits.
Dive Insight:
The conditional approval makes Protego the second crypto platform expected to operate under a national trust charter overseen by the OCC. The regulator gave Anchorage a similar green light last month. Two other crypto companies, BitPay and Paxos, applied for national trust charters in December.
The OCC, prior to Acting Comptroller Brian Brooks's January resignation, took several steps to include crypto in the national banking conversation and set boundaries for its use. The regulator issued an interpretive letter last month clarifying banks can use stablecoins to facilitate payment transactions for customers on an independent node verification network. That followed guidance from July specifying that national banks could provide cryptocurrency custody services and hold unique cryptographic "keys" associated with cryptocurrency on behalf of customers.
In a press release, Greg Gilman, Protego's founder and executive chairman, lauded the "forward-thinking regulators" at the OCC and Washington state's Department of Financial Institutions.
"The OCC has made huge strides in a short period of time with respect to the approval of digital banks, and we are thrilled to have been among the first approvals issued by the OCC," he said.
Protego's conditional approval at the federal level comes less than eight months after the company received a state trust charter.
"The demand from institutional investors for secure and compliant access to digital assets — led by Bitcoin — is growing every day," Chris Hunter, Protego's head of business development, said in the release. "I think that's one reason why we have already secured commitments for more than $1.5 billion in [assets under custody] at launch."
Protego — whose executive team boasts experience at Goldman Sachs, Bank of America, State Street, BNY Mellon, Morgan Stanley, BNP Paribas and UBS — will be headquartered in Seattle, with sales offices in Boston and New York.
