Zach Witkoff said that his company will comply with all the OCC requirements and the OCC will regulate World Liberty Trust. Unlike a regular commercial bank, it will not be able to make loans or accept federally insured deposits.
But those reassurances are not good enough for Sen. Warren, who is prepared to introduce legislation to challenge the move. Here's a look at how much money is involved.
Last year, as the Wall Street Journal reports, Trump sold $263 million in equity in World Liberty to a group of investors headed by United Arab Emirates Sheikh Tahnoon bin Zayed al Nahyan. Moving forward as a national trust bank, World Liberty will be able to deal directly with institutional investors.
The Wall Street Journal notes that having a bank charter will allow World Liberty to issue, redeem and store more stablecoins without middlemen. Currently BitGo, a digital trust company, stores USD1 reserves. People can also trade, borrow and lend USD1 stablecoins through the platform Dolomite. Removing the middleman will streamline World Liberty's operations and boost profits.
Having a federal banking charter will also ease regulatory compliance, as the company will be able to operate across state lines rather than dealing with individual state regulators.
As the Wall Street Journal reports, World Liberty is not the first crypto venture to get a charter as a national trust bank. Jonathan Gould, a banking lawyer who now heads the OCC, also gave Ripple and Crypto.com approval to set up banks.
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Concerns about conflicts of interest
Former chief White House ethics lawyer Richard Painter told CNN the World Liberty Trust bank charter approval is fraught. He managed potential conflicts of interest for senior administration appointees under President George W. Bush.
"It is quite precarious to have the president and his family invested heavily in one of our most important regulated industries at the same time as he has the power to hire and fire the regulators," he said.
Sen. Warren is more blunt. "The OCC's review is a sham," she wrote in a statement.
The OCC's Gould rejected the idea that the president would do something "inappropriate or illegal" related to World Liberty. OCC Senior Deputy Comptroller Stephen Lybarger responded to concerns that Gould, as a Trump appointee, might give World Liberty preferential treatment — either being more lax with regulations or applying stiffer regulations to others unfairly.
"The Comptroller and staff acted consistently with their statutory duties and ethical obligations with respect to the Application," he wrote, adding that career OCC staff will be responsible for regulating World Liberty Trust and receive regular training on legal and ethical responsibilities.
White House spokesperson Anna Kelly previously said: "Neither the President nor his family has ever engaged — or will ever engage — in conflicts of interest."
But Warren and fellow Democratic lawmakers want more than reassurances. They want the president and his family to completely divest from World Liberty. They are poised to introduce a bill — the Ending Presidential Corruption in Banking Act — to stop the OCC from greenlighting banks that the president, his family or other government officials own.
It may not be time to close the books on the World Liberty Trust approval just yet.
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This article originally appeared on Moneywise.com under the title: Elizabeth Warren targets Trump family's $1.7 billion World Liberty crypto bank, plans bill to block the OCC charter
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
