Jack Dorsey’s Block Seeks Bank Charter to Custody Bitcoin

Why a Federal Charter Matters for Digital Asset Custody

Block, the cryptocurrency services arm of Jack Dorsey’s company, announced on September 4 that it has applied to the Office of the Comptroller of the Currency (OCC) for a national bank charter. The proposed institution, Builders Bank & Trust, would operate as an uninsured national trust bank focused exclusively on digital asset custody and settlement. It would not accept deposits or extend loans, instead providing secure storage for Bitcoin and other cryptocurrencies, and handling stablecoin settlements.

How Will Builders Bank Operate Without Deposits or Loans?

The move follows Block’s rapid expansion in the crypto custody space. In 2023, the company moved approximately $10.7 billion in Bitcoin volume through its custody platform, operating under more than 50 state money transmission licenses. By obtaining a federal charter, Block aims to streamline regulatory oversight, reduce compliance costs, and enhance its credibility among institutional investors. The OCC’s approval would allow Builders Bank to centralize its custody operations under a single federal framework, potentially simplifying cross‑border transactions and attracting larger clients seeking a regulated custodian.

What Does This Mean for the Crypto Industry?

A federal bank charter provides a uniform regulatory regime that can be more predictable than the patchwork of state licenses. For Block, this could mean faster onboarding of new institutional clients, tighter security standards, and a clearer legal footing for handling disputes. The OCC has historically been cautious about digital assets, but recent guidance has opened the door for banks that can demonstrate robust risk controls. Builders Bank would need to meet stringent capital, cybersecurity, and operational requirements, but the benefits of a national charter could outweigh the costs. Industry analysts suggest that a federal charter may also position Block to negotiate better terms with payment processors and settlement networks, further expanding its service offering.

Builders Bank & Trust will function solely as a custodian and settlement agent. It will hold digital assets on behalf of clients, ensuring that funds are protected through multi‑layered security protocols. The bank will also facilitate the settlement of stablecoins, which are increasingly used for cross‑border payments and liquidity provision. By avoiding deposit-taking and lending activities, the bank reduces exposure to credit risk, allowing it to focus resources on safeguarding client assets. The OCC’s approval process will scrutinize the bank’s governance structure, risk management framework, and compliance procedures to ensure that it can operate safely within the broader financial system.

Frequently Asked Questions

The approval of Builders Bank could set a precedent for other crypto firms seeking federal banking status. It signals that the regulatory environment is becoming more accommodating to digital asset businesses that can demonstrate strong risk controls. For institutional investors, a federally chartered custodian offers a higher level of assurance and potentially lower regulatory friction. However, the bank will still face intense scrutiny from regulators, and any lapses in security could trigger significant reputational damage. The broader market may see increased competition among custodians, driving innovation in security technologies and service offerings.