OCC returns Zerohash's trust bank charter application

The Office of the Comptroller of the Currency returned Zerohash's application for a U.S. trust bank charter on July 17, a decision the firm did not announce. CoinDesk found the return in OCC records. Zerohash handles backend operations for Morgan Stanley's E*Trade, putting it outside the recent run of provisional approvals.

Under OCC policy, a return ends the application process because the filing was 'materially deficient.' A denial would arrive with a detailed explanation; a return does not. Two fintechs, Wise and Bunq, received outright denials in recent cases. Zerohash's return carried no specifics and no public statement.

Zerohash contests any suggestion of failure. The company told CoinDesk the return was an administrative step, coordinated with the OCC and not a substantive decision on the merits. It does not affect current operations, which continue under existing regulatory approvals. The firm plans to refile this month.

The refiled application will be shaped differently. The original, filed in March, covered 'a wide range of digital asset and fiduciary services.' The next attempt will take a more 'sequenced' approach, beginning with 'a more focused approval of national trust activities aligned with our intended rollout timeline.' Zerohash says it looks forward to swift review.

The narrowing suggests the first application was overbroad. A charter request that sweeps across digital assets and fiduciary services is a complicated thing to vet, and a regulator that has been granting approvals at a rapid clip can still send an ambitious application back for revisions.

The March filing joined a rush. The Guiding and Establishing National Innovation for U.S. Stablecoins Act gave U.S. stablecoin issuers a legal structure and quickened the push to become trust banks for digital assets. Dozens of applications have won provisional approvals. Zerohash's has not.

The company had been behaving like an applicant expecting approval. Job postings advertised for a national trust officer and a chief operating officer at a 'Zerohash National Trust Bank' with a 'pending charter application.' Stephen Gardner, Zerohash's co-president, identifies himself on LinkedIn as CEO of the 'zerohash national trust bank (pending).' Those listings went up before the return.

That confidence makes the return more telling. Institutional crypto custody is a crowded field, and trust charters have become the credential firms seek. Zerohash has a real reference: handling the backend for E*Trade is not a minor endorsement. The regulator still found the filing materially deficient.

A return and a denial lead to different next steps. Denials, as with Wise and Bunq, are final. A return leaves the door open. Zerohash is refiling this month, and the decision to sequence the request suggests it understood the message: start with what you can support, not what you hope to become.

Even so, the episode carries a cost. Dozens of firms already have provisional approvals and can begin building their trust businesses. Zerohash has to reapply and wait. Its existing operations continue under current approvals, but the custody business is not standing still.

The OCC's approval pace is one part of a broader infrastructure buildout. This week, SEC staff cleared Franklin Templeton's tokenized money fund under Rule 17f-2, an early indication that onchain cash tools are entering the institutional custody framework. The more ways there are to custody digital assets, the more useful a trust charter is to a firm like Zerohash, and the more conspicuous its returned application becomes.