Back in June, Circle applied for a national trust bank charter. Among the many benefits of such a charter (federal preemption, avoiding BHCA compliance, possible access to a Fed master accounts, etc.) is the ability for the stablecoin issuer to custody its own reserves. Circle said that was what it was planning to do: "If approved, First National Digital Currency Bank, N.A. would be authorized to operate as a federally regulated trust institution, subject to OCC oversight, and would oversee the management of the USDC Reserve on behalf of Circle's U.S. issuer." Makes sense! However, Anchorage Digital, which got a national trust bank charter all the way back in 2021 and, after the passage of the GENIUS Act, expanded into stablecoin issuance, recently announced that it is going to use U.S. Bank to custody its stablecoin assets. Why? There are two primary reasons I can see: 1.) The OCC has fiduciary rules and guidance that restrict self-dealing and the self-deposit of fiduciary funds. The agency generally pushes banks to use appropriate third-party custodians for client/beneficiary assets, absent narrow conditions. 2.) Per the GENIUS Act, payment stablecoin reserves must be held in a relatively narrow set of assets (cash at insured banks/credit unions, short-dated Treasuries, and certain repos/MMFs). In virtually all cases, payment stablecoin issuers will choose to hold their reserves in a mix of these assets, including cash. The trouble is, even if you could get around the OCC's self-dealing rules, national trust banks are not allowed to take in deposits. They can't custody the cash backing their own stablecoins! Which brings us back to that quote from Circle's press release (emphasis mine): "If approved, First National Digital Currency Bank, N.A. would be authorized to operate as a federally regulated trust institution, subject to OCC oversight, and would oversee the management of the USDC Reserve on behalf of Circle's U.S. issuer." Oversee the management of ... They never actually said that they were going to hold all of (or even any of) USDC's reserves. They may just manage the partner banks (like BNY Mellon) that already do so. So, it turns out that even though Circle (and other stablecoin issuers) are pursuing national trust bank charters, which were explicitly designed to facilitate the custody of assets, they likely will not custody their own stablecoin reserves (at least not fully). ...