Trump-Backed World Liberty Financial Seeks US Bank Charter to Bring USD1 Stablecoin Fully Onshore

World Liberty Financial, the Trump-backed crypto venture, has filed for a U.S. national trust bank charter with the Office of the Comptroller of the Currency (OCC). The proposed entity, World Liberty Trust Company, National Association (WLTC), is designed to issue and custody the USD1 stablecoin, a dollar-backed digital asset that has seen over $3.3 billion in circulation. The move aligns with broader industry efforts to integrate stablecoins into the traditional financial system under federal oversight.

The charter application would allow WLTC to serve institutional clients, including cryptocurrency exchanges and investment firms. Services will include digital asset custody and stablecoin conversion, enabling institutions to move assets between USD1 and other stablecoins. WLTC plans to operate under the framework of the GENIUS Act, which aims to regulate stablecoins while ensuring compliance with anti-money laundering (AML) and cybersecurity protocols.

The U.S. banking sector has raised concerns about the potential impact of stablecoins on traditional lending. More than 200 community bank leaders have warned that stablecoin yield programs could siphon deposits from local banks, weakening their ability to fund small business loans and other credit operations.

Why Did This Happen?

World Liberty Trust Company aims to become a one-stop provider for stablecoin issuance and custody. By operating under a federal charter, the company seeks to offer a regulated framework that aligns with existing banking standards.

The Trump-backed venture launched USD1 in 2024, positioning it as a fully-backed stablecoin backed by U.S. dollars. The new charter could streamline operations, reduce reliance on third-party custodians, like BitGo, and expand institutional adoption of USD1.

How Did Markets React?

The stablecoin market has grown to over $312 billion in value, with USD1 reaching $3.4 billion in circulation. The application for a bank charter has drawn attention from both supporters and critics. While some see it as a step toward mainstream integration of digital assets, others highlight potential conflicts of interest, particularly with the Trump administration's ties to crypto projects like Binance.

Community bankers argue that stablecoins can undermine the purpose of traditional lending. The American Bankers Association (ABA) has warned that indirect yield programs could redirect $6.6 trillion in deposits away from insured bank accounts, limiting credit availability for small businesses and households.

What Are Analysts Watching Next?

Regulators and policymakers are closely monitoring the implications of this move. The OCC has previously downplayed concerns about deposit flight, stating that any material outflows would require regulatory intervention.

Analysts are also watching whether Congress will amend the GENIUS Act to address loopholes in yield-based stablecoin programs. The ABA and other industry groups are pushing for stricter oversight to ensure fair competition between traditional banks and stablecoin issuers.

In the short term, the success of USD1 will depend on its ability to attract institutional clients and demonstrate compliance with U.S. regulatory standards. The long-term impact of stablecoins on the broader financial system remains uncertain.

The application for a bank charter highlights the growing intersection between digital assets and traditional finance. As stablecoin adoption continues, regulators and market participants will need to balance innovation with financial stability and consumer protection.