Key facts
- Zerohash, a crypto infrastructure provider, failed to secure a U.S. trust bank charter.
- The Office of the Comptroller of the Currency returned Zerohash's application, citing material deficiencies.
- Zerohash plans to re-apply with a more focused scope by the end of the month.
- The company serves high-profile clients including Morgan Stanley's E*Trade.
Zerohash, a crypto infrastructure provider that serves major financial firms including Morgan Stanley's E*Trade, has had its application for a U.S. trust bank charter returned by the Office of the Comptroller of the Currency (OCC). The regulator's decision suggests the application contained "material deficiencies," effectively ending the current bid, though not formally denying it.
Zerohash stated that the return is an administrative process allowing them to refile this month with a narrower scope. The company indicated this approach was coordinated with the OCC and does not impact its current operations, which are conducted under existing regulatory approvals. Previously, Zerohash had advertised for positions at a "Zerohash National Trust Bank" with a pending charter application.
The initial application, filed in March, was part of a wave of firms seeking crypto-oriented trust bank charters. However, Zerohash's filing was sent back on July 17. Unlike outright denials, a returned application does not come with a detailed explanation from the OCC. The OCC's policy allows for returning filings that lack necessary financial or officer information, or that do not sufficiently respond to information requests.
The Independent Community Bankers of America had previously objected to Zerohash's application, citing the rapid pace of approvals and applications for digital asset-focused trust banks. Zerohash had also been reportedly seeking further investment at a valuation above $1.5 billion and had acquisition talks with Mastercard that did not materialize. The company already operates as a state-chartered trust bank, and its business with E*Trade does not rely on federal charter approval.
Separately, Zerohash is involved in a legal dispute with its former chief compliance officer, Edgar Guerra, who claims he was fired to mask compliance issues, including significant gaps in money-laundering controls. It is unclear if the OCC was aware of these claims.