OCC says Protego does not meet regulatory requirements
In February 2021, the Office of the Comptroller of the Currency—an office of the United States Department of the Treasury tasked with overseeing federal banking—granted conditional approval for Protego Trust Company to have Washington-based registered to convert into a national trust bank.
After the OCC extended the one-time conditional approval, until February 4, 2023, a spokesperson said. Luck on Friday, Protego failed to meet the pre-switching requirements, meaning its conditional approval expired.
The failure of Protego to become a federally chartered bank, which would allow it to store digital assets and grant it other authentication privileges, is another setback. to the banking aspirations of the crypto industry in the United States.
Currently, Anchorage Digital is the only crypto company to receive a national banking charter from the OCC, and Wyoming-based Custodia is refuse member of the Federal Reserve system in January.
Protego and another company in the process of registering for the OCC national bank trust charter, Paxos, are rumor object after the Fed rejected Custodia, with speculation that the OCC would follow suit.
In early February, Protego’s founder and executive chairman, Greg Gilman, described the fact that Protego had been asked by the OCC to withdraw its application as “untrue,” and sources familiar with the matter said. said. Luck they do not believe that Paxos has been asked to withdraw its application — or denied.
“Paxos continues to work constructively with OCC,” a spokesperson said Luck.
The situation is more complicated with Protego.
As part of its conditional approval, Protego has financial requirements—$54 million in total tier 1 capital and liquidity, in addition to fully operational capital, Luck learned that it must be secured before it works.
“[The] pre-conversion requirements including policies, procedures, systems and other measures to ensure the safe and sound operation of the bank and to meet minimum capital and liquidity requirements ,” said an OCC spokesperson Luck.
According to a person with direct knowledge of the matter, Protego signed definitive agreements for an investment in excess of that amount and submitted it to the OCC on February 3 — the day before Its conditional approval expires — as part of the agreement. Certificate of Completion. The next day, OCC informed Protego that it was not yet authorized to operate as a national trust bank, meaning it did not have an opening date. As part of this communication, OCC did not tell Protego that the company had not met the conditional approval requirements.
On Friday, OCC released weekly newsletter with an addendum that Protego’s time has expired for a transition—the application’s first public acknowledgment—which an OCC spokesperson confirmed to Luck.
In a phone call with Luck, Gilman said Protego now has two potential pathways. The first is to meet a requirement with a regulatory body in your home state of Washington to operate as a state bank. The second is to re-register with OCC, especially since in Gilman’s view, Protego has met its capital requirements.
The expiration of Protego’s application remains another significant setback for the crypto industry in the United States. Last week, two of the main US crypto-friendly banks collapsed, with Silvergate Notification it will voluntarily liquidate and the regulator in New York control of the Signature.
The OCC also seems to be closing its doors to crypto companies. Under the Trump administration’s chief executive, Brian Brooks, the agency has overseen the conditional approvals of several companies. His successor, Michael Hsu, reversed course, indicating he would withdraw his pro-crypto policies and order review the actions of the agency.