The US Office of the Comptroller of the Currency (OCC) stated that the firm failed to meet pre-conversion requirements. Protego had been granted an 18-month conditional charter in February 2021, which was extended once. Under the charter, the firm could not accept deposits. Protego founder Greg Gilman said the company had met the financing requirement and could either reapply to the OCC or apply to state authorities to operate as a state bank.
“[The] pre-conversion requirements included policies, procedures, systems and other measures to ensure the safe and sound operation of the bank as well as meeting minimum capital and liquidity requirements.”
A federal charter would have enabled Protego to perform credentialing functions such as Know Your Customer measures, as well as custody digital assets. At present, Anchorage Bank is the only crypto firm to receive a national banking charter. Paxos also received a conditional national trust bank charter in 2021, but is still waiting for approval.
SCOOP: The OCC says the crypto firm Protego did not meet the requirements to convert into a national trust bank, another massive setback for the crypto industry as its banking options dwindle:https://t.co/WdopSyOdZS
— Leo Schwartz (@leomschwartz) March 17, 2023
Custodia Bank was denied a place in the Federal Reserve System on Feb. 23. Meanwhile, some state regulators have been taking steps to allow crypto firms to apply for banking charters. Wyoming, for example, has established a special purpose depository institution charter for crypto companies. Protego’s situation highlights the difficulties crypto firms face in gaining regulatory approval, even with conditional charters. The OCC bulletin listed Protego and indicated that time had expired on its conversion on Feb. 4, while the company had lined up agreements on the necessary financing to meet charter requirements.
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Source: Crypto News