Applications for new federal banking or trust charters used to be few and far between. But with the stablecoin boom, not anymore. Following the passage of the GENIUS Act for stablecoins, Stripe subsidiary Bridge is the latest to submit an application for a trust charter to the Office of the Comptroller of the Currency. The news was revealed by Bridge CEO Zach Abrams on X.
Coinbase was the first applicant this month, followed by Connectia, which we believe is an affiliate of Sony Bank. For Coinbase the primary driver is expanding its crypto custody offering, while Bridge and Connectia are focused on stablecoin operations. Sony Bank started working on stablecoins early last year, and more recently has been conducting DeFi experiments in a Japanese proof of concept sandbox.
Bridge’s charter application supports its broader stablecoin strategy. The company recently unveiled its stablecoin issuance platform. For organizations that can process large volumes, such as neobanks, wallets and payment firms, using an ‘off-the-shelf’ stablecoin like USDC or Tether is considered a lost opportunity. That’s because the yield on the underlying reserves goes to Circle or Tether. Additionally, third party users have to pay fees if they wish to convert to fiat in bulk and customization is trickier.
The obvious drawback of numerous bespoke stablecoins is they could have less liquidity, making them trickier to use for payments. Bridge’s solution involves providing instant exchanges between the bespoke stablecoins and the larger stablecoins such as USDC and Tether.
Not only are stablecoin issuers pursuing trust charters, but increasingly they are also looking to become vertically integrated. Stripe is developing the Tempo blockchain, Circle is working on Arc and Tether is working with Stable. It remains to be seen whether these moves will threaten the promises of web3 as a network without walled gardens.
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