Kraken’s Parent Company Pushes for Federal Trust Charter in Bold Regulatory Expansion
A Strategic Move Toward Traditional Financial Legitimacy
In a significant development for the cryptocurrency industry, Payward—the company behind the well-known crypto exchange Kraken—has submitted an application to become a federally chartered national trust company. This announcement, shared on Friday with financial news outlets, represents the company’s ambitious attempt to bridge the gap between traditional banking services and the digital asset world. By applying for this charter with the U.S. Office of the Comptroller of the Currency (OCC), Payward is positioning itself to offer bank-level custody services for digital assets under federal regulatory oversight. If the application receives approval, it would establish the Payward National Trust Company (PNTC), a federally regulated entity specifically designed to provide fiduciary custody and related services for cryptocurrencies and other digital assets. This move is particularly targeted at institutional clients and customers who require the heightened security and regulatory protections typically associated with traditional banking institutions. The application reflects a broader trend in the cryptocurrency industry, where companies are increasingly seeking legitimacy through traditional financial frameworks to attract more conservative institutional investors who have been hesitant to enter the digital asset space without proper regulatory safeguards.
Meeting Institutional Demands in an Evolving Regulatory Landscape
The timing of Payward’s application is particularly noteworthy as it comes during a period of significant regulatory evolution in the United States. Arjun Sethi, Co-CEO of both Payward and Kraken, emphasized the importance of this move by stating that “a national trust company provides the certainty institutions require and establishes the infrastructure to build the next generation of custody.” This statement underscores a critical pain point in the cryptocurrency industry: the need for institutional-grade custody solutions that meet the stringent requirements of large financial players. Traditional financial institutions, pension funds, and other large-scale investors have often cited concerns about custody arrangements and regulatory uncertainty as major barriers to entering the crypto market. By pursuing a national trust charter overseen by the OCC, Payward is directly addressing these concerns and attempting to create a framework that satisfies the risk management and compliance requirements of institutional investors. The current political and regulatory climate has also proven more favorable to such initiatives, with the Trump administration taking a notably more industry-friendly approach to digital asset regulation compared to previous years, creating an opportune window for crypto firms to seek federal charters, licenses, and banking approvals that might have faced more resistance in the past.
An Aggressive Acquisition Strategy Building Toward an IPO
Payward’s application for a national trust charter doesn’t exist in isolation but rather forms part of a comprehensive expansion strategy that has seen the company make several high-profile acquisitions in recent months. This aggressive growth approach appears designed to build a complete, regulated financial infrastructure for digital assets, possibly in preparation for a future initial public offering. In 2025, the company made headlines by acquiring NinjaTrader, a retail futures trading platform, for an impressive $1.5 billion. This acquisition brought significant expertise and infrastructure in the derivatives trading space, an area that’s increasingly important as crypto markets mature. Following that major deal, Payward announced in April its agreement to purchase Bitnomial, a crypto derivatives exchange, for up to $550 million. This acquisition is particularly strategic because it includes a complete suite of licenses from the Commodity Futures Trading Commission (CFTC), covering brokerage operations, clearing services, and exchange functions—essentially the full regulatory stack needed to operate a comprehensive derivatives business in the United States. Most recently, the company struck yet another major deal, this time agreeing to pay $600 million for Reap Technologies, a Hong Kong-based payments firm. This acquisition signals Kraken’s intentions to expand significantly into the Asian market while building infrastructure around stablecoin-powered cross-border payments and card services, areas that represent the practical, everyday applications of cryptocurrency technology that could drive mainstream adoption.
Complementing Existing Banking Infrastructure
The proposed national trust company would work alongside Kraken’s existing banking operations, most notably Kraken Financial, which was chartered as a Wyoming Special Purpose Depository Institution (SPDI) in 2020. Kraken Financial achieved a significant milestone by becoming the first digital-asset bank to secure a Federal Reserve master account, which provides direct access to the U.S. payments system—a crucial capability that allows for more efficient movement of funds and greater integration with the traditional financial infrastructure. Payward has framed the OCC application as part of what it calls a “multi-charter” strategy, designed to offer different types of regulated financial services under both state and federal oversight frameworks. This approach recognizes that different types of clients and services may benefit from different regulatory structures, and by maintaining multiple charters, Payward can offer flexibility to its diverse customer base. Under the proposed arrangement, the new Payward National Trust Company would leverage the parent company’s existing compliance programs, risk management systems, and custody infrastructure while expanding access to clients who specifically require a federally regulated qualified custodian. This is particularly important for certain institutional investors who may face internal policies or regulatory requirements that mandate they only work with federally chartered entities, making state charters like Wyoming’s SPDI insufficient for their needs, regardless of their quality or robustness.
Industry-Wide Trend Toward Traditional Financial Charters
Payward’s move is emblematic of a broader transformation occurring throughout the cryptocurrency industry. Increasingly, crypto-native companies are exploring bank and trust charters as regulators provide greater clarity around custody requirements and the rules governing institutional participation in digital assets. National trust charters, which are overseen by the OCC, have become particularly attractive to cryptocurrency firms seeking broader legitimacy and the ability to operate nationwide under a single federal regulatory framework, rather than navigating the complex and expensive process of obtaining licenses in each individual state. This shift represents a maturation of the industry, moving away from the “wild west” reputation that characterized its early years toward integration with established financial regulatory frameworks. For the crypto industry, this evolution is double-edged: while it brings legitimacy, institutional access, and potentially greater stability, it also subjects these companies to the same regulatory burdens and oversight that traditional financial institutions face. For regulators and policymakers, the challenge is creating frameworks that protect consumers and maintain financial system stability while not stifling innovation or imposing requirements designed for traditional assets onto fundamentally different digital assets. The increasing number of crypto firms pursuing these traditional charters suggests that the industry believes the benefits of regulatory clarity and institutional access outweigh the costs of compliance and oversight.
Building Complementary Pillars for the Future
Co-CEO Arjun Sethi has articulated a vision in which Payward’s Wyoming SPDI charter and the prospective OCC national trust charter would serve as “complementary pillars” of the company’s overall banking strategy. This multi-pronged approach reflects the reality that the regulatory framework for digital assets in the United States continues to evolve and remains somewhat fragmented across federal and state jurisdictions. By establishing strong positions under both state and federal regulatory regimes, Payward is positioning itself to adapt to whichever regulatory approaches ultimately prevail or become standard in the industry. The completion of the Bitnomial acquisition, which closed with the company securing the full CFTC derivatives stack, demonstrates that Payward is successfully executing on its strategy to become a comprehensively regulated financial institution that happens to specialize in digital assets rather than simply being a crypto exchange. This transformation—from crypto exchange to multi-faceted financial services company—represents a significant evolution in the company’s business model and ambitions. As traditional financial institutions slowly increase their involvement in digital assets, and as crypto-native companies like Payward adopt traditional financial structures, the line between these two worlds continues to blur. The outcome of Payward’s OCC application will be closely watched throughout the industry as a signal of how receptive federal regulators are to crypto companies entering traditional banking spaces and could influence whether other crypto firms pursue similar strategies or take different approaches to achieving regulatory legitimacy and institutional acceptance.
