OCC Proposes Regulation to Clarify Permissible Activities for Trust Banks

The Proposal addresses recent comments about the scope of permissible activities for national trust banks, as applications to charter new banks continue to be filed.

Key Points

• The Proposal would amend the OCC’s chartering regulations to clarify that national trust banks are not limited to fiduciary activities as defined by the OCC.
• If adopted as proposed, the Proposal would further increase the attractiveness of the national trust bank charter.

Introduction

On January 8, 2026, the Office of the Comptroller of the Currency (OCC) issued a Notice of Proposed Rulemaking (the Proposal) that would amend the OCC’s chartering regulation under 12 CFR 5.20. The proposal would revise this regulation to clarify that a national trust bank may engage in activities of a trust company, “activities related thereto,” and activities that are part of the business of banking. The OCC stated that it was thereby confirming its view that national trust banks may engage in non-fiduciary activities in addition to their fiduciary activities, and that this view is consistent with the National Bank Act.

Background of National Trust Bank Activity Rulemaking

National banks have engaged in trust company activities for many years. In 1978, Congress clarified that it was not contrary under the National Bank Act for a national bank to limit its operations to “those of a trust company and activities related thereto.”

In 2003, the OCC amended 12 CFR 5.20 to clarify that special purpose national banks could be chartered for “activities within the business of banking.”¹ The regulation included language stating that a bank that conducts activities other than “fiduciary activities” must conduct at least one core banking function: receiving deposits, paying checks, or lending money. In the Proposal, the OCC stated that this language had led to misunderstanding: rather than limiting the activities of national trust banks to fiduciary activities alone, as some recent commenters have argued, the OCC contended that the language was intended only to address special purpose banks engaged solely in activities that are part of the business of banking under 12 USC 24(Seventh).

The Proposal

The Proposal would clarify that the 2003 rulemaking was not intended to address national trust banks, and that the OCC had never interpreted the rulemaking to prohibit national trust banks from engaging in non-fiduciary activities.² As an example, the OCC cited non-fiduciary custody and safekeeping activities, which it stated were authorized as part of the business of banking under 12 USC 24(Seventh).

Specifically, the Proposal would amend 12 CFR 5.20, by replacing references to “fiduciary activities” with “the operations of a trust company and activities related thereto,” as, for example, in 12 CFR §5.20(e)(1)(i):

“The OCC charters a national bank under the authority of the National Bank Act of 1864, as amended, 12 U.S.C. 1 et seq. The bank may be a special purpose bank that limits its activities to the operations of a trust company and activities related thereto or to any other activities within the business of banking. A special purpose bank that conducts activities other than operations of a trust company and activities related thereto must conduct at least one of the following three core banking functions: Receiving deposits; paying checks; or lending money” (emphasis added).

The Proposal would reaffirm that the 2003 “core banking functions” requirement applies only to special purpose banks engaged solely in activities within the business of banking.

Request for Comment

The OCC included a general request for public comment on all aspects of the Proposal and suggestions for “alternative language that the OCC could use to make the regulation more clear with respect to the OCC’s chartering authority.” Comments are due within 30 days of publication of the Proposal in the Federal Register.

In Context: The GENIUS Act

The GENIUS Act (the 2025 legislation that established a regulatory framework for payment stablecoins)³ permits national trust banks to be permitted issuers of payment stablecoins and has driven a surge of applications from non‑traditional firms and financial institutions seeking national trust bank charters, including to act as custodians for digital assets. That influx drew criticism that, if those applications were approved, the OCC would have improperly expanded the scope of national trust bank powers. The Proposal is a direct response this criticism.

Conclusion

The Proposal reflects the ongoing efforts at the OCC to use existing authorities and interpretations to foster access, flexibility, competition, and innovation in the banking sector. Such actions include the recent conditional approval for five national trust banks charters engaged in digital asset activities (see this Latham blog post), and the interpretation allowing riskless principal transactions in crypto assets (see this Latham blog post). It also suggests, consistent with OCC Interpretive Letter #1176,⁴ that national trust banks will likely continue to have significant advantages as a charter choice — if the Proposal is adopted, they will be able to conduct both trust company and related activities and activities that are part of the business of banking (other than deposit-taking), while still not bringing their parent companies under Bank Holding Company Act regulation.

1. “The OCC charters a national bank under the authority of the National Bank Act of 1864, as amended, 12 U.S.C. 1 et seq. The bank may be a special purpose bank that limits its activities to fiduciary activities or to any other activities within the business of banking” (emphasis added). 
2. For example, see OCC Interpretive Letter #1176 (“OCC Chief Counsel’s Interpretation on National Trust Banks”), January 11, 2021. OCC Interpretive Letter #1176 was issued by Jonathan Gould, then Senior Deputy Comptroller and Chief Counsel, and current Comptroller of the Currency. 
3. For more information on the GENIUS Act, see this Latham Client Alert. 
4. See OCC Interpretive Letter #1176 (“[A] national trust bank may also engage in activities beyond those authorized under state law for a state trust company provided such activities are permitted for a national bank under other sources of authority such as 12 U.S.C. §§ 24(Seventh)).”