OCC: Uninsured National Trust Banks Exempt From State Money Transmission Licensing Laws

On June 10, 2026, the Office of the Comptroller of the Currency (OCC) published an interpretive letter confirming that an uninsured federally chartered national trust bank (NTB) providing digital asset services is not required to obtain an Iowa money transmitter license, and that similar state money transmitter licensing regimes are preempted by federal law when applied to all forms of federally chartered national banks – even those whose deposit accounts are uninsured. The letter relies on the National Bank Act’s (NBA) grant of nationwide powers to national banks, including NTBs, and the OCC’s longstanding and exclusive visitorial authority, and concludes that state licensing and supervisory schemes that condition or burden the exercise of those federal powers have no legal effect.

Background

Before Dec. 12, 2025, the entity at issue operated as a New York-chartered limited liability trust company and held money transmitter licenses in numerous states, including Iowa. On Dec. 12, 2025, the OCC approved the entity’s conversion to an uninsured national bank with operations limited to those of a trust company and related activities under 12 U.S.C. § 27(a).

Concurrent with its conversion, the entity surrendered its Iowa money transmitter license and advised the Iowa Division of Banking (DoB) that the NBA preempts Iowa’s licensing requirements. The Iowa agency noted that Iowa’s Uniform Money Transmission Modernization Act exempts only “federally insured depository financial institutions” from licensing, and requested the legal basis for the entity’s surrender of its money transmitter license, given that even after its conversion to an NTB, the entity remained uninsured. The NTB sought OCC confirmation that the NBA preempts Iowa’s money transmitter licensing law and analogous state regimes.

In May 2020, the OCC issued Interpretive Letter 1167 addressing the permissibility of another NTB to operate in states without holding a state-specific money transmitter license. The OCC confirmed that states could not require an NTB to obtain a state license to exercise its “fiduciary powers.” The OCC acknowledged that while the NTB at issue was conducting activities that may appear as traditional money transmission, it was doing so to “satisfy client obligations . . . in fulfillment of its role as trustee.”

The facts in IL 1167 were specific to money transmission conducted in furtherance of specified fiduciary duties, leaving ambiguity regarding non-fiduciary money transmission, such as payment-related activities.

Iowa’s money transmitter law

Iowa’s money transmission statute generally requires any person engaged in the business of money transmission in the state to obtain a license from the Iowa DoB. Among other things, the law:

• requires an application, prescribed information, and an application fee

• vests the Iowa DoB with the authority to approve or deny applications

• subjects licensees to ongoing obligations, including periodic reports of condition, audited financial statements, delegate reporting, and event reporting

• imposes operational and prudential standards, including timely transmission, refunds, disclosures, and other requirements

• requires annual licensing fees

• grants the Iowa DoB supervisory powers, including for periodic examinations, demands for books and records, administrative enforcement actions, suspension or revocation of licenses, and receivership authority.

Iowa provides certain exemptions, including for “a federally insured depository financial institution”. Because the NTB is not insured – indeed, it does not maintain any deposit accounts – it does not qualify for that state law exemption.

Federal framework: National Bank Act preemption and visitorial authority

The OCC’s analysis is grounded in longstanding U.S. Supreme Court and OCC precedent interpreting the NBA and related statutes:

• Federally chartered national banks are subject to the “paramount authority of the United States” (Davis v. Elmira Sav. Bank, 161 U.S. 275, 283 (1896)) and are formed, organized, and governed by federal law (12 U.S.C. §§ 21 et seq.). The NBA authorizes the OCC to charter national banks, including by conversion from state institutions, and expressly recognizes NTBs whose operations are limited to trust company activities and related activities (12 U.S.C. §§ 26, 27, 35).

• Once federally chartered, a national bank may engage in a wide range of activities authorized by federal law, including fiduciary powers (12 U.S.C. §§ 24(Seventh), 92a), and those activities are “not normally limited by, but rather ordinarily pre‑empt[], contrary state law” (Barnett Bank v. Nelson, 517 U.S. 25, 32 (1996)). Under Barnett Bank, a state law that “prevents or significantly interferes with” a national bank’s exercise of its federally authorized powers is preempted.

• Courts and the OCC have repeatedly held that state licensing laws are preempted when applied to national banks because they impose impermissible conditions on the exercise of federal powers. The OCC cites regulations and precedent (including 12 C.F.R. §§ 7.4007(b)(6), 7.4008(d)(1), 34.4(a)(1), and OCC Interpretive Letter 1167).

Separately, the NBA provides that “[n]o national bank shall be subject to any visitorial powers except as authorized by Federal law” (12 U.S.C. § 484(a)), subject to narrow exceptions (e.g. limited authority for state officials to review records for unclaimed property and escheat compliance, 12 U.S.C. § 484(b)). Courts have described “visitation” as:

• examining a corporation’s manner of conducting business and enforcing observance of applicable laws and regulations (Guthrie v. Harkness, 199 U.S. 148, 158 (1905))

• exercising general supervision and control, oversight of corporate affairs, inspection, superintendence, direction, or regulation (Cuomo v. Clearing House Ass’n, 557 U.S. 519, 528 (2009)).

OCC regulations at 12 C.F.R. § 7.4000 provide examples of visitorial powers consistent with this case law. The Supreme Court has held that a national bank is subject to the OCC’s “superintendence, and not the licensing, reporting, and visitorial regimes” of the states in which it operates, and that the dual banking system “has never permitted States to license, inspect, and supervise national banks.” (Watters v. Wachovia Bank, N.A., 550 U.S. 1, 11, 24 n.7 (2007)).

Effect of Iowa licensing requirements

The OCC concluded that, as of the date of the OCC’s approval of the entity’s conversion to an NTB, the NTB obtained federal authority to engage in its fiduciary and non‑fiduciary activities on a nationwide basis. Under the NBA, the NTB’s ability to conduct those federally authorized activities cannot be made contingent on obtaining additional state permission.

Applying the Barnett standard, the OCC reasoned that:

• Requiring the NTB to obtain an Iowa money transmitter license as a condition to conducting federally authorized activities would “prevent or significantly interfere with” the NTB’s exercise of its federal powers by:

  • making Iowa licensing a condition precedent to exercising federal authority

  • potentially subjecting the NTB’s federal authority to an effective state “veto” if Iowa denied, conditioned, or revoked the license.

• As a result, Iowa’s money transmitter licensing requirement is preempted by the NBA when applied to the NTB, regardless of whether such NTB meets any state law exemption criteria.

Effect of other state licensing requirements

The OCC further stated that the same conclusion applies to “any similar state money transmitter licensing requirements that purport to apply to the Bank [the newly chartered NTB], including by limiting their licensing exemptions to a subset of national banks.” In other words, a state may not indirectly regulate any type of federally chartered national bank by defining exemptions in a way that excludes particular categories of national banks (such as uninsured NTBs) from otherwise generally applicable exemptions.

Visitorial powers and state supervisory regimes

Beyond the licensing “gatekeeper” function, Iowa’s framework gives the state agency broad, ongoing supervisory authority over licensees and applicants, including:

• collection and review of non‑public information in applications

• periodic reporting and production of books and records on demand

• periodic examinations

• administrative enforcement actions, license suspension or revocation, and receivership.

The OCC characterizes these authorities as “visitorial powers” within the meaning of 12 U.S.C. § 484, and therefore fundamentally inconsistent with the NBA’s grant of exclusive visitorial authority to the OCC over national banks. As applied to a national bank:

• Requiring the bank to obtain and maintain a state money transmitter license necessarily subjects it to the state’s visitorial regime, which federal law forbids unless expressly authorized.

• Iowa’s requirement that the bank hold a money transmitter license and submit to the state’s supervisory and enforcement jurisdiction is therefore “impermissible” under § 484.

Again, the OCC extends this reasoning to “any similar state requirements,” making clear that state supervisory, examination, and enforcement frameworks typically embedded in money transmitter statutes cannot be applied to national banks, including uninsured NTBs, through licensing or registration requirements.

Scope and limitations

The OCC expressly notes:

• The conclusion rests on the specific facts, activities, and circumstances described in the underlying request. Different facts, different activities, or different state laws and regulations could yield a different preemption outcome. 

• Because the relevant state law provisions (e.g. licensing, oversight, and the operational and prudential standards) are not “state consumer financial laws,” the OCC is not required to follow the lengthy administrative process required to preempt state consumer financial laws (see 12 U.S.C. § 25b).

• Similarly, the relevant state law provisions at issue do not concern community reinvestment, consumer protection, fair lending, or the establishment of intrastate branches, and therefore, the OCC is not required to follow the lengthy administrative process required to issue an opinion letter that preempts these state law provisions (see 12 U.S.C. § 43).

Conclusion and practical implications

The OCC confirmed that the NTB may conduct its federally authorized digital asset and related fiduciary and non‑fiduciary activities nationwide without obtaining state money transmitter licenses or qualifying for state law exemptions from such licensing. State money transmitter licensing laws that purport to require any category of national bank, including uninsured NTBs, to be licensed as a condition of engaging in its federally authorized activities:

• are preempted under the NBA to the extent they prevent or significantly interfere with the bank’s exercise of federal powers

• are impermissible insofar as they subject the bank to state visitorial powers that are reserved exclusively to the OCC.

For federally chartered national banks, including uninsured NTBs engaged in digital asset custody, trading, settlement, and related services, the letter reinforces the position that state money transmitter licensing and supervisory regimes cannot be used to condition or constrain the exercise of national bank powers. State exemptions that are limited to insured depository institutions or other subsets of national banks do not alter this federal preemption analysis.

Since October 2025, the OCC has conditionally approved 12 NTB charter applications, some of which were de novo, and others were conversions from state trust companies. Many of these newly formed NTBs’ business plans include the provision of digital assets, securities, and fiat currency custody services as fiduciary. It would not be unreasonable to conclude that these entities would also be able to conduct non-fiduciary related money transmission activities without obtaining state licensure. This is indicative of how the OCC is viewing NTB charters, and is yet another illustration of how the OCC is working to entice entities to obtain national bank charters. On Dec. 8, 2025, OCC Comptroller Gould spoke at the Blockchain Association Policy Summit, noting a decrease in new bank charters and stating that “from 2011 through 2024, the OCC received, on average, less than four charter applications per year.” Gould said the OCC is working to reverse this trend, highlighting an increase of 14 de novo charter applications before the OCC in 2025. The interpretive letter discussed in this alert is another example of the OCC’s efforts to make the national bank charter attractive to de novo applicants.

While not addressed explicitly, it would seem that the above reasoning could apply to other state licensing regimes, including those required for lending, and those related to the digital asset space, such as the California Digital Finance Assets Law License, the Louisiana Virtual Currency Business Activity License, or the New York Virtual Currency Business Activity Company License.

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