How did the Trump family's USD1 enter the US federal banking system?

A nineteen-page preliminary approval letter

On Friday, August 14, 2026, the Office of the Comptroller of the Currency (OCC) published a 19-page approval document on its website, giving "preliminary conditional approval" to the application of the World Liberty Trust Company, National Association for a national trust bank.

(Image caption) Exterior view of the Office of the Comptroller of the Currency (OCC) headquarters in Washington, D.C., where the agency gave preliminary conditional approval on August 14, 2026, to World Liberty Trust’s application for national trust banking.

The company filed its application in January to locate in the Bay Harbor Islands, Florida. World Liberty Financial CEO Zach Witkoff is slated to become the trust bank's president and director; the company stated after the approval announcement that he will also serve as chairman. Zach is the son of Steve Witkoff, a special envoy of US President Trump. If the licensing process is completed, World Liberty Trust will take over the issuance, redemption, and reserve management of the USD1 stablecoin from BitGo and provide digital asset custody for institutional clients.

This letter does not yet grant it the authority to officially commence operations. The OCC reserves the right to amend, suspend, or revoke approval prior to final authorization. World Liberty Trust still needs to complete capital raising, management review, independent auditing, risk control, anti-money laundering and information security system establishment, and undergo pre-opening inspections before obtaining a final license.

What has changed by a license that has not yet taken effect?

USD1 was launched in March 2025. As of August 14, 2026, its circulating market capitalization was approximately $4 billion, making it the fourth largest stablecoin globally by market capitalization. This is market data at a specific point in time, reflecting scale, and cannot be used to solely demonstrate user distribution, trading activity, or direct redemption capabilities.

Currently, BitGo is responsible for the issuance, redemption, and reserve custody of USD1, while World Liberty Financial owns the brand and leads the development of the related ecosystem. Once World Liberty Trust is operational, issuance, reserve management, custody, and some conversion services will be consolidated into a single OCC-regulated institution.

This vertical integration can reduce coordination costs between multiple service providers, bringing issuance, redemption, reserves, and custody into the same regulatory responsibility chain, and may also allow the World Liberty system to retain more reserve management revenue. However, whether BitGo will completely exit in the new architecture, whether it will continue to provide technology, liquidity, custody, or conversion services, and its future revenue arrangements are not currently confirmed by any publicly available contracts.

While efficiency improves, operational risks, governance risks, related-party transaction risks, and profit distribution issues will also be centralized within a single system. Issuance and reserve custody functions, previously handled by external institutions, will be transferred to a trust bank with shared indirect economic interests with World Liberty Financial. Regulatory responsibility becomes more centralized, and external checks and balances are correspondingly reduced.

(Image caption) Zach Witkoff, CEO of World Liberty Financial, is nominated to be the president and chairman of World Liberty Trust. His family background is related to Trump's special envoy, Steve Witkoff.

What kind of "bank" is it?

If ultimately approved, World Liberty Trust will be legally recognized as an uninsured national trust bank. The public easily confuses "bank" with security or government protection, so this legal boundary must be clarified.

It cannot accept deposits and make loans as widely as a regular commercial bank, nor is it covered by FDIC deposit insurance. USD1 holders hold on-chain tokens; whether they can redeem them directly from the issuer at face value of one dollar depends on customer eligibility, compliance review, and terms of service. USD1 is not a bank deposit protected by FDIC.

The OCC filing also shows that World Liberty Trust, under its current business plan, has no intention of applying for a master account with the Federal Reserve Bank and has committed not to engage in general banking business as defined by the Bank Holding Company Act. Any future changes to its primary business plan will require prior approval from the OCC.

The approval document outlines three core business areas: issuance, redemption, and reserve management of USD1; providing digital asset custody as a trustee; and processing conversions between USD1 and other approved stablecoins for custody clients. Its functions focus on asset custody, stablecoin issuance, and payment settlement, and it does not engage in credit creation as a typical commercial bank.

A national trust banking license can reduce the fragmented costs of obtaining similar custodian or trust licenses state by state, but it should not be interpreted as a complete withdrawal from state-level consumer protection, business law, data protection, sanctions, and other applicable obligations. This license provides federal regulatory status and a nationwide operating foundation, not a blanket authorization for all financial activities.

Twenty million US dollars and four billion US dollars are two different accounts.

The OCC requires World Liberty Trust to maintain at least US$20 million in Tier 1 capital and hold at least 50% of that capital in eligible liquid assets, or US$10 million, whichever is higher. The bank must also maintain additional liquid assets sufficient to cover operating expenses under stress for 180 days. These conditions remain in effect for the first three years after commencement of operations.

The $20 million is capital the bank uses to cover operational, compliance, technology, cybersecurity, custody, and legal losses; it is not a reserve supporting the approximately $4 billion USD1 circulation. You cannot divide $20 million by the USD1 circulation and then interpret the result as the stablecoin's reserve coverage ratio or a traditional bank's capital adequacy ratio.

USD1's stability relies on another balance sheet: how much reserve the issuer holds for the tokens in circulation, what assets constitute the reserve, whether the assets are segregated, whether they can be liquidated in a timely manner under market pressure, and through what channels holders can redeem their tokens.

These two accounts are related, but their legal functions are completely different. The bank's capital protection institution serves its own continued operational capacity, while the stablecoin reserve serves the redemption commitment of the tokens.

(Image caption) Aerial view of the Bay Harbor Islands, Florida, where the World Liberty Trust plans to establish its operations as the national trust bank's base.

The GENIUS Act is still in the implementation phase.

The GENIUS Act, signed into law by Trump on July 18, 2025, establishes a new federal institutional framework for U.S. payment-based stablecoins. The Act stipulates that eligible issuers must, in principle, hold identifiable reserves at a ratio of at least one-to-one. These assets primarily include cash, readily withdrawable bank deposits, short-term U.S. Treasury securities, eligible repurchase agreements, and government money market funds. The Act also stipulates monthly reserve disclosure, redemption policies, and arrangements for stablecoin holders' priority claims to reserve assets in the event of issuer bankruptcy.

However, the passage of the bill does not mean that all operating rules are finalized. As of August 14, 2026, the main implementing rules, weekly and quarterly reporting forms, and anti-money laundering and sanctions compliance rules for stablecoin issuers published by the OCC are still in the draft or consultation phase.

According to the bill, its main provisions will take effect 18 months after July 18, 2025, or 120 days after the major federal regulatory agency publishes its final implementing rules, whichever comes first. Therefore, the OCC has reserved the power in the conditions of World Liberty Trust's approval to require it to adjust, cease, or divest businesses that do not comply with the GENIUS Act and its final implementing rules in the future.

A national trust banking license does not automatically replace all subsequent licensing, reporting, and ongoing regulatory requirements under the stablecoin regime. World Liberty Trust must simultaneously comply with two overlapping sets of regulations: banking law and stablecoin law.

Reserve certification, assurance and full audit

World Liberty Financial currently claims that USD1 is exchangeable for US dollars on a one-to-one basis, with reserves consisting of cash, government money market funds, and other cash equivalents. BitGo's public page lists monthly attestation reports, and World Liberty Financial also has an on-chain reserve dashboard displaying reserve data, total token supply, supply distribution across different blockchains, and collateral ratios.

These three types of information should not be confused.

An on-chain reserve dashboard can track token supply and display reserve data reported by external systems via oracles, but it cannot allow the public to directly view the real-time status of every dollar in their bank accounts.

Monthly audits typically involve an independent accountant reviewing management’s statements on reserves, circulating tokens, and coverage ratios made on a specific date, providing the results of an audit at one or more points in time.

A full financial statement audit covers a broader scope, including financial statements, internal controls, liabilities, related-party transactions, going concern status, and other significant risks. The OCC's ongoing oversight will advance transparency, but regulatory status itself cannot replace the evidence that each of these three levels should provide.

(Image caption) The visual combination of a US dollar banknote and a stablecoin symbolizes USD1 as a stablecoin pegged to the US dollar, with a current market capitalization of approximately US$4 billion, ranking among the top in the world.

Reserve yield: The core cash flow of the stablecoin business model

Most mainstream USD stablecoins do not pay interest on reserve assets to ordinary holders. After receiving USD, issuers allocate reserves in short-term Treasury bonds, government money market funds, or bank deposits. Interest income, after deducting custody, compliance, liquidity, and operating costs, constitutes a significant source of revenue for the issuing system.

The larger the circulating supply of USD1, the greater the reserve assets and potential interest income typically become. According to existing disclosures by World Liberty Financial, BitGo and affiliated entities of World Liberty Financial share USD1 reserve revenue under an agreement. If World Liberty Trust completes its takeover, more reserve revenue may remain within the World Liberty system; the specific percentage depends on undisclosed service and revenue distribution agreements.

Reuters estimates that by the end of June 2026, the Trump family had earned approximately $50 million from USD1-related businesses; and by April of the same year, World Liberty Financial and its related arrangements had already channeled over $1.6 billion to the Trump family. These figures are based on Reuters' calculations of publicly available information and are not the audited financial data published by World Liberty Financial.

This business model connects payment traffic, short-term Treasury yields, brand influence, and financial licenses. Users gain access to on-chain dollar circulation instruments, the issuance system acquires reserve returns and ecosystem control, and the US Treasury market gains a growing source of short-term demand.

Research from the Bank for International Settlements shows that by December 2025, global stablecoin assets will exceed $270 billion, with nearly $35 billion in U.S. Treasury bills purchased in 2025. Such fund flows can increase demand for short-term safe assets, but concentrated redemptions could also create adverse pressure. The impact of stablecoins on Treasury bond prices and dollar liquidity has come under scrutiny from central banks and market regulators.

Stress test of presidential family economic interests and regulatory independence

The most sensitive aspect of the World Liberty Trust is not the licensing terms themselves, but the rare proximity between the applicant's economic interests and public power.

Public disclosures by World Liberty Financial show that DT Marks DEFI LLC, an entity associated with the Trump family, holds approximately 38% of the economic interest in WLF Holdco LLC, the parent company of World Liberty Financial's operating entity. This 38% cannot be directly interpreted as the Trump family holding a 38% stake in the proposed trust bank. World Liberty Trust is wholly owned by WLTC Holdings LLC; these two legal entities and their respective interests need to be understood separately.

DT Marks DEFI LLC and DT Marks SC LLC are two different entities. The former is related to WLF Holdco's equity and WLFI's related revenue arrangements; the latter appears in USD1's economic interests and this passive investment commitment. Public information has disclosed a great deal of ownership in DT Marks DEFI, but the beneficial ownership of DT Marks SC has not been disclosed to the same extent; the equity information of the former cannot be directly applied to the latter.

The OCC, which approved the World Liberty Trust's application, is part of the U.S. Treasury Department. The Comptroller of the Currency is nominated by the President and confirmed by the Senate. Applicants with significant economic ties to the family of a sitting president are subject to approval by a federal agency headed by a president-appointed chief and reviewed by career officials through authorized procedures. Both facts must be presented simultaneously; neither should be omitted.

The OCC filings show that seven public comments were received from four commentators during the application review process. Four of these comments directly raised concerns about potential conflicts of interest involving Trump and his family, World Liberty Financial, and non-US investors.

The OCC responded that the application was reviewed by career officials according to established procedures, and the relevant approval authority was exercised by professionals authorized by the Ombudsman; after the bank opened, it would also be continuously monitored primarily by non-politically appointed regulators. Democratic lawmakers had previously publicly considered the application a major conflict of interest and demanded an unredacted version of the application materials during congressional hearings. The former represents the regulatory agency's explanation of procedural independence, while the latter represents questions regarding political and public interest aspects.

The OCC also obtained three "passive investment commitments" from several U.S. and non-U.S. indirect investors, restricting signatories from interfering in the appointment, management, pricing, investment, and operational decisions of bank directors.

The first document was signed by Eric Trump in his capacity as president of DT Marks SC LLC; the second by Hamad Alshamsi on behalf of StringZ Holding RSC (DE) LLC; and the third by Zachary Folkman in his capacity as a managing member of AMGUS, LLC.

These commitments can legally restrict investor control of the bank, but they do not eliminate the economic ties between the parent company, the trust bank, USD1 reserve yields, Trump family-related entities, and other investors. The effectiveness of these commitments requires the support of board records, related-party transaction reviews, information segregation, pricing procedures, continuous reporting, and OCC enforcement.

Legal entities can be separated, but economic interests still need to be thoroughly examined.

(Image caption) Physical U.S. savings bonds and other government securities, reflecting the asset structure of USD1 reserves, which mainly consist of cash, short-term U.S. Treasury bonds, and government money market funds.

Boundaries deliberately drawn by regulatory review

The OCC determined that World Liberty Financial and some of its foreign investors were not direct parties to the bank application. Issues concerning WLFI token trading, foreign investment, constitutional remuneration clauses, and other politically controversial matters were deemed beyond the statutory scope of this banking license review.

World Liberty Trust has also committed not to issue, custody, or trade WLFI tokens. This segregation arrangement reduces the risk of banks directly participating in the group's governance token business.

Regulatory agencies reviewing specific applications within their statutory authority is inherently justifiable. However, the scope of public interest observation is often broader than that of a single license. Connections between parent company interests, bank control, reserve returns, token businesses, foreign capital, and political families, even when distributed across different legal entities, can still lead to conflicts of interest, information asymmetry, and issues of regulatory credibility.

The system needs to answer not whether all connections should be prohibited, but how these connections should be disclosed, priced, and restricted, who should continuously monitor them, and whether those who violate commitments can be held accountable in a timely manner.

Even after conditional approval, many questions remain unanswered.

World Liberty Trust still has a long way to go before it can open for business. It needs to hire independent external auditors, establish independent internal audit management, and comply with the Bank Secrecy Act, anti-money laundering, sanctions, cybersecurity, and customer data protection regulations. Its directors and key executives must obtain no-objection letters from the OCC, and the bank must notify them of the opening date in advance and pass pre-opening inspections.

If capital raising is not completed within 12 months, or if the business fails to commence operations within 18 months, this preliminary approval will, in principle, become invalid.

Regulatory issues won't magically disappear on opening day.

When USD1 reserves are transferred from BitGo to World Liberty Trust, the asset valuation, ownership, bank accounts, trust beneficiary arrangements, and control over minting and burning must be independently verified. The migration process must also ensure uninterrupted redemption services and avoid overlapping or gaps in liability during the same period.

The ultimate destination of reserve proceeds also needs clearer disclosure. How service fees, interest income, dividends, and other gains are distributed among World Liberty Financial, World Liberty Trust, entities related to the Trump family, BitGo, and other investors will directly affect external assessments of the fairness of related-party transactions.

Whether ordinary USD1 holders can redeem directly through a clear, equal, and timely process remains to be seen. Currently, direct minting and redemption services are primarily available to eligible BitGo and institutional clients; other holders typically still need to rely on exchanges, platforms, or regulated custodians for exit. The ability to sell tokens on the secondary market does not equate to holders having direct redemption access from the issuer.

USD1's market capitalization of approximately $4 billion should also be further analyzed. The top ten addresses, major exchanges, institutional clients, supply distribution across different blockchains, and daily actual redemption volume are more indicative of its liquidity and concentration risk than a single market capitalization ranking.

Regarding the three passive investment commitments, the market needs to observe how the OCC examines whether investors are involved in director appointments, pricing, investments, and related-party transactions. Paper commitments can only become institutional constraints if they are traceable, verifiable, and enforceable.

Career officials can reduce the risk of political interference in individual approvals. Regulatory credibility still depends on the consistent application of the same set of standards across business opening reviews, ongoing oversight, related-party transactions, and enforcement against violations.

US dollar stablecoins are entering the banking system.

GFM.News previously summarized the Trump family's digital currency empire as a politically branded financial system encompassing $TRUMP, $MELANIA, WLFI, USD1, American Bitcoin, and other asset arrangements. Different entities connect political influence, digital tokens, publicly traded companies, payment networks, short-term Treasury bonds, and family profits.

The OCC's initial approval of the World Liberty Trust adds a layer of federal banking infrastructure to the system.

This is not an isolated case. Since the end of 2025, the OCC has conditionally approved the applications for national trust banks from several digital asset institutions, including First National Digital Currency Bank (Circle), Ripple National Trust Bank, BitGo, Fidelity Digital Assets, Paxos, Foris DAX, and Coinbase National Trust Company.

Most of these institutions still need to complete the final approval process, but the direction is clear: the stablecoin industry is moving away from its early stage, which relied entirely on state-level licenses, offshore issuance, and private custody, and is gradually entering an institutional space comprised of federal regulation, banking laws, institutional capital, and the global payment system.

If USD1 completes all procedures, it will gain nationwide issuance, reserve management, institutional custody, and some payment and settlement capabilities. While it still has clear boundaries from ordinary commercial banks, it has already entered the financial infrastructure where banking laws, federal inspections, anti-money laundering, sanctions, fiduciary responsibilities, and stablecoin rules overlap.

Licenses can provide order, but they cannot replace trust. The future creditworthiness of USD1 will be determined by the completeness of reserves, the smoothness of redemptions, the reliability of custody, the transparency of returns, the fairness of related-party transactions, and the enforcement of regulatory commitments.

The ultimate test for the market is whether the American banking system can still openly and consistently apply the same standards when dealing with an institution that has significant economic ties to the family of a sitting president.

Disclaimer

Data cutoff date: August 15, 2026. Market data, company equity, and regulatory status may change subsequently. This article is based on publicly available information for institutional and financial analysis and does not constitute investment, legal, tax, or trading advice. Digital assets carry significant risks; readers should verify information independently and make prudent decisions.