A major coalition of community organizations is pushing back against Kraken's bid to become a federally chartered bank, arguing that allowing a cryptocurrency exchange to operate under a national trust bank charter would create a dangerous regulatory gap. The National Community Reinvestment Coalition (NCRC), which represents over 700 community-based organizations, filed formal opposition to the application in June 2026, raising concerns about consumer protection, financial system safety, and whether the Office of the Comptroller of the Currency (OCC) even has the legal authority to grant such a charter to a crypto firm.

What Is Kraken Actually Asking For?

Kraken, operating under its parent company Payward, Inc., is seeking a national trust bank charter to establish Payward National Trust Company (PNTC). The exchange says it wants to provide custodial services for digital assets, including safekeeping, recordkeeping, and settlement services for both institutional and individual clients. But the application goes further: Kraken also proposes to offer staking services, trading activities, and collateral management, either directly through the bank or indirectly through affiliated companies.

For those unfamiliar with the term, staking is a process where cryptocurrency holders lock up their digital assets to help validate transactions on a blockchain network. In exchange, they receive rewards. Kraken would act as an intermediary in this process, aggregating customer funds, staking them on behalf of users, and taking a percentage of the rewards as a fee.

Why Are Community Groups Concerned About This?

The NCRC's opposition centers on several core issues. First, the coalition argues that the OCC lacks statutory authority to grant a national trust bank charter to a cryptocurrency exchange. Under the National Bank Act of 1864, trust bank charters are supposed to be limited to institutions engaged in fiduciary activities, meaning they manage money and property for the benefit of others, even when it conflicts with their own financial interests. The NCRC contends that Kraken's proposed services, particularly staking and trading, are profit centers for the exchange itself, not true fiduciary services.

Second, the coalition raises consumer protection concerns. Although Kraken states it will not directly offer traditional deposit accounts, the application describes fiat currency flowing in and out of customer accounts and a "seamless financial ecosystem" where customers can manage digital assets alongside traditional currencies. This sounds remarkably like deposit-taking activity, the NCRC argues. If PNTC operates as a national trust bank, customer deposits would not be insured by the Federal Deposit Insurance Corporation (FDIC), yet the "national bank" label could mislead consumers into believing their funds have federal protection.

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How Could This Create Regulatory Arbitrage?

A national trust bank charter would grant Kraken significant advantages without corresponding obligations. The NCRC identifies four areas where this imbalance would be problematic:

• Community Investment Responsibilities: Traditional banks are required to serve their communities and meet certain lending and investment obligations. A crypto exchange operating as a trust bank would avoid these requirements while gaining the federal regulatory status and market credibility of a banking institution.
• Consumer Protection Standards: Full-service banks operate under comprehensive consumer protection frameworks and deposit insurance schemes. A trust bank focused on digital assets would operate without comparable safeguards, creating a two-tier system where crypto firms receive banking status without banking obligations.
• Regulatory Oversight: Although trust banks are not FDIC-insured, they typically face certain supervisory requirements. However, Kraken would control PNTC as its sole owner without being subject to consolidated Federal Reserve supervision that normally applies to bank holding companies, according to the NCRC.
• Systemic Risk Management: The NCRC argues that allowing a cryptocurrency exchange to operate as a bank without full banking oversight could pose risks to the broader financial system, particularly given Kraken's history of compliance issues.

What Does Kraken's Compliance History Show?

The NCRC specifically cited Kraken's "demonstrated history of failing to meet legal compliance requirements" as a reason to deny the charter application. While the coalition's comment letter does not detail specific violations, this reference suggests regulators should scrutinize whether a company with past compliance problems should be granted expanded banking powers and access to customer deposits.

"Granting a national trust bank charter to PNTC also will pose risks to the safety and soundness of the financial system, because Payward/Kraken has a demonstrated history of failing to meet legal compliance requirements," stated the NCRC in its formal opposition.

National Community Reinvestment Coalition, Public Comment Letter to the Office of the Comptroller of the Currency

What Happens Next?

The OCC, which is responsible for chartering national banks and trust companies, will review all public comments on Kraken's application before making a final decision. The NCRC's opposition, combined with similar concerns from other stakeholders, could influence whether regulators approve or deny the charter. This case represents a broader tension in crypto regulation: as digital asset companies seek deeper integration with the traditional financial system, regulators must decide whether existing banking frameworks adequately protect consumers and maintain financial stability, or whether new rules are needed.

The outcome could set a precedent for how other cryptocurrency exchanges approach banking relationships and whether the crypto industry can operate under traditional banking charters or must develop its own regulatory framework.