Block Seeks OCC Approval for Builders Bank & Trust, a National Crypto Custody Bank

Block, the fintech company co-founded by Jack Dorsey, has submitted an application to the Office of the Comptroller of the Currency (OCC) to create Builders Bank & Trust, N.A., a national trust bank focused on custody services for bitcoin and stablecoins. This application, filed on September 8, represents a significant step for Block as it seeks to operate under federal oversight, bypassing the complex state-by-state licensing currently required for its digital asset operations.

Builders Bank & Trust will be an uninsured national trust bank, meaning it will not accept deposits or make loans, distinguishing it from traditional banks. Instead, its primary function will be to provide custody and fiduciary services for digital assets, operating under the fiduciary standards associated with a trust charter. The bank is set to be headquartered in Sioux Falls, South Dakota, a location known for its favorable regulatory environment for trust companies. Lee Woolley has been appointed as president and CEO, bringing experience from Northern Trust and BNY Mellon.

The rationale behind pursuing a national charter lies in the desire to simplify regulatory compliance. Currently, Block holds over 50 state money-transmitter licenses, each with unique requirements. A national trust charter would streamline this process into a single federal relationship, enhancing operational efficiency. In 2025, Block processed approximately $10.7 billion in bitcoin transactions, highlighting the need for a more cohesive regulatory framework to support its growth.

The application is under review by the OCC, and Block has indicated that Builders Bank will not commence operations until all necessary approvals are obtained. This initiative aligns with a broader trend, as other companies like Coinbase, Paxos, and Ripple are also exploring similar OCC trust charters. While Builders Bank will provide institutional-grade custody services, clients will need to assess the associated risks, as it will not have FDIC insurance. Block is expected to implement alternative assurance mechanisms to meet institutional due diligence requirements.

New Developments on Illinois Crypto Tax Law

Illinois has enacted the Digital Asset Tax Act, imposing a 0.2% tax on digital asset business activities, effective January 1, 2027. This law specifically targets transactions, transfers, and custody services by brokers with over $100,000 in gross receipts connected to Illinois.

Two lawsuits have been filed against this tax: one by the Blockchain Association and the Crypto Council for Innovation on August 21, and another by the Digital Chamber in late July. Both aim to halt the tax before it takes effect, citing constitutional concerns.

The plaintiffs argue that the tax discriminates against digital asset activities compared to traditional financial activities, potentially violating the Commerce Clause and Due Process rights. They also contend it may breach the Internet Tax Freedom Act by imposing a discriminatory tax on electronic commerce.

Industry representatives warn that compliance with the tax could cost firms significantly, with estimates ranging from tens of thousands to over $1 million per firm.

The law was passed during the final hours of the Illinois legislative session as part of the fiscal year 2027 budget, with claims of limited debate on such a significant new tax category.