Block Applies for OCC Trust Charter to Custody Bitcoin and Stablecoins
Block, the payments company led by Jack Dorsey, has submitted a formal application to the Office of the Comptroller of the Currency (OCC) to charter Builders Bank and Trust as an uninsured national trust bank. The sole purpose of the proposed institution is to provide custody and related fiduciary services for Bitcoin and stablecoins. If the OCC grants the charter, Builders Bank would operate under federal supervision without accepting deposits or issuing loans, placing it in a distinct regulatory category that carries real consequences for how accounting firms, auditors, and CFOs think about digital asset custody arrangements. For any practice that has been wrestling with counterparty-risk disclosures and the proper balance-sheet treatment of client or corporate crypto holdings, this application is worth examining closely in the context of your current crypto accounting software setup.
What Block Is Actually Proposing
The structure of Builders Bank and Trust
A national trust bank charter from the OCC is not the same as a full commercial banking licence. The entity cannot take customer deposits, cannot make loans, and is not eligible for FDIC insurance. What it can do is hold assets in a fiduciary capacity under a consistent, federally determined ruleset that applies uniformly across all fifty states. That last point matters enormously for a company like Block, which processes payments and holds digital assets on behalf of users and business customers across multiple jurisdictions. A single OCC-supervised framework removes the patchwork of state-level money-transmission and trust licences that currently govern most crypto custodians.
Block has named Lee Woolley, its digital asset strategy lead, as the proposed president and CEO of Builders Bank. The company says the institution will draw on Block's existing digital asset operations and on its experience running Square Financial Services, an industrial bank it already operates. That background gives the application some operational credibility with the OCC, which typically scrutinises the management competence and prior financial-services experience of applicants closely.
Scope of services
The application covers custody and related fiduciary services. In practice, that means safekeeping private keys, facilitating asset transfers at the direction of clients, and potentially providing sub-custody or white-label custody infrastructure to other financial institutions. Block has not publicly detailed every service line it intends to offer, but the fiduciary framing suggests the bank would owe a legally defined duty of care to its custody clients, a standard that is materially higher than a typical contractual custodian relationship.
The Broader Race for Federal Crypto Trust Charters
Who else is applying
Block is not the first, and almost certainly not the last, fintech or crypto firm to pursue this route. Ripple has applied for a similar national trust bank charter. The wave of applications reflects a structural shift: companies that spent years operating under state licences are now concluding that a federal charter offers a more durable and commercially scalable foundation, particularly as institutional clients demand regulated counterparties with a clear supervisory hierarchy.
For accounting firms advising those institutional clients, the practical question is how to treat assets held at a federally chartered trustee versus assets held at a state-regulated custodian or, worse, at an exchange with no trust charter at all. The answer touches both audit methodology and the specific fields your digital asset accounting software uses to classify custody arrangements.
Why the OCC route is significant
The OCC has authority to charter national banks and federal savings associations, and it extended that authority to national trust banks with a long history predating crypto. An OCC-chartered entity is subject to the Bank Secrecy Act, anti-money laundering programme requirements, know-your-customer rules, and regular examination by federal bank examiners. For a custody client, that means the counterparty sits inside a supervisory framework with real teeth: the OCC can issue cease-and-desist orders, impose civil money penalties, and require remediation plans. State-licensed trust companies face similar rules in theory, but the consistency and resourcing of OCC examination is generally regarded as a higher baseline.
That distinction is directly relevant to Block's earlier OCC filing and what it means for crypto accounting software workflows, where the practical audit and reconciliation considerations are explored in detail.
Accounting and Audit Implications for Firms and CFOs
Custody classification and balance-sheet presentation
Under US GAAP, the determination of whether a digital asset held in custody should appear on a client's balance sheet turns largely on control: who holds the private keys, under what legal arrangement, and whether the custodian has the right or ability to rehypothecate or use those assets. An OCC-chartered trust bank holding assets in a fiduciary capacity would, by definition, be restricted from using client assets for its own account. That changes the control analysis compared to many exchange-based custody arrangements where the legal terms are less clearly fiduciary.
For CFOs carrying Bitcoin or stablecoins on a corporate balance sheet, the FASB's fair-value model for crypto assets (ASC 350-60, effective for fiscal years beginning after 15 December 2024) requires recognising unrealised gains and losses through net income. The custodian's regulatory status does not alter that measurement model, but it does affect how you disclose custody risk in the notes. An OCC-supervised trustee with a federal fiduciary duty is a different risk profile from a self-custody wallet or an unregulated exchange account, and that difference should be reflected in your disclosure language.
AML and KYC obligations for firms onboarding custody clients
If Builders Bank is chartered and operates as an OCC-supervised custodian, accounting firms and their clients that onboard to it will be dealing with a counterparty that runs a full Bank Secrecy Act compliance programme. That has two practical effects. First, the due-diligence burden on the client side is partially de-risked: the custodian is doing KYC on its own customers and filing suspicious activity reports where required. Second, accounting firms acting as intermediaries or advisers on custody arrangements still need to satisfy their own AML obligations independently. The custodian's regulated status does not substitute for the firm's own customer due-diligence procedures.
Practices that already use crypto bookkeeping software integrated with transaction monitoring should check whether their tooling can ingest custody data from a bank-grade custodian and flag the entity type correctly for AML screening purposes. A federally chartered trust bank will produce different transaction data formats and reporting outputs than a typical exchange API feed.
What auditors need to watch during the application period
The OCC application process is not quick. The regulator typically issues a preliminary conditional approval, requires the applicant to meet a series of pre-opening conditions, and then grants a final charter. During that period, Block's custody operations continue under their existing licensing arrangements. Auditors reviewing financial statements of entities that custody assets with Block should note the application's existence but cannot treat Builders Bank as an OCC-supervised entity until a charter is formally granted. Any audit opinion or management representation that references the regulatory status of the custodian needs to be accurate as of the balance-sheet date, not anticipatory.
The evolving legislative backdrop also matters here. How the congressional recess is reshaping the crypto tax and digital asset accounting calendar is relevant context: pending legislation on digital asset market structure could interact with OCC trust charter rules in ways that are not yet fully resolved.
Practical Steps for Accounting Firms and CFOs
Review your custody counterparty disclosures now
You do not need to wait for Builders Bank to receive a charter to act. The OCC application signals that the custody landscape for Bitcoin and stablecoins is shifting toward federally supervised institutions. Now is a good time to audit your current custody disclosures: are they accurately describing the regulatory status of the counterparty, the legal nature of the custody arrangement (fiduciary or contractual), and the associated risks? If your disclosures use generic language like "held at a regulated custodian," you may need to sharpen the description before your next reporting period.
Assess your digital asset accounting software for custody-type tracking
Not all digital asset accounting software tracks the regulatory classification of a custodian as a distinct data field. As federally chartered trust banks enter the market alongside state-licensed custodians and unregulated exchanges, the ability to differentiate custody types in your books becomes more important for both audit trails and disclosure accuracy. If your current tooling lumps all custodians into a single category, that is a gap worth addressing in your next system review.
Update client AML risk assessments
For firms that perform AML risk assessments on clients holding digital assets, the expected entry of OCC-chartered custodians into the market is a material change in the risk landscape. A client holding Bitcoin at a federally examined trust bank presents a different residual AML risk profile than one holding at an offshore exchange. Your risk-scoring methodology and customer due-diligence templates should be updated to reflect this distinction, ideally before chartered entities are operational so you are not retroactively adjusting files under time pressure.
Key Points at a Glance
| Factor | Builders Bank (Proposed) | Typical State-Licensed Custodian |
|---|---|---|
| Regulator | OCC (federal) | State banking or trust regulator |
| Deposit-taking | No | Varies by licence type |
| FDIC insurance | No (uninsured) | Typically no for crypto custody |
| BSA/AML obligations | Yes, federal examination | Yes, state examination |
| Fiduciary duty | Yes (trust charter) | Depends on charter and contract |
| Geographic consistency | National (all 50 states) | State-specific, may require multiple licences |
The table above reflects the proposed structure as described in Block's public application. The OCC has not yet issued a conditional approval, and the final charter terms could differ.
Source: Cointelegraph
Frequently Asked Questions
What is a national trust bank charter and how does it differ from a full banking licence?
A national trust bank charter, issued by the OCC, authorises an institution to hold assets in a fiduciary capacity and provide related services. Unlike a full commercial banking licence, it does not permit the institution to accept deposits from the public or make loans. It is also not eligible for FDIC deposit insurance. The trade-off is a narrower scope of business in exchange for a consistent, federally supervised framework that applies uniformly across all US states.
Does the OCC application mean Builders Bank is already a regulated entity?
No. Filing an application with the OCC begins a review process that can take many months. The OCC typically issues a preliminary conditional approval, requires the applicant to satisfy a series of pre-opening conditions, and then grants a final charter. Until that final charter is issued, Block's custody operations continue under existing arrangements and Builders Bank has no regulatory standing as an OCC-supervised institution.
How should auditors treat client assets held in custody at Block during the application period?
Auditors should characterise the custodian's status accurately as of the balance-sheet date. Because no charter has been granted yet, the custodian cannot be described as OCC-supervised in audit documentation or client disclosures for the current period. Management representations and audit opinions must reflect current facts, not anticipated regulatory outcomes.
Will a federally chartered trust custodian change how Bitcoin is measured on a corporate balance sheet?
The measurement model under FASB ASC 350-60 requires fair-value accounting for crypto assets regardless of where they are held, so the custodian's charter status does not alter how Bitcoin is measured or where unrealised gains and losses flow. What it does affect is the risk-disclosure narrative in the financial statement notes, since a federally supervised fiduciary presents a materially different counterparty-risk profile than an unregulated custodian.
Should accounting firms update their AML procedures before any OCC charter is granted?
Yes. Even during the application period, it is prudent to begin updating AML risk-scoring methodologies and customer due-diligence templates to distinguish between federally chartered trust custodians and other custody types. Updating templates proactively means you are not retroactively adjusting client files under time pressure once Builders Bank, or another OCC-chartered custodian, becomes operational.