Rain applies for a National Trust Bank of the United States amidst the backdrop of encryption license litigation

Rain has submitted an application to establish a national trust bank in the United States; if the Federal Reserve (OCC) approves the plan, this institution will be able to custody digital assets, manage stablecoin reserves, and issue stablecoins backed by the US dollar.

• Rain has applied for a national trust bank license to manage assets and issue stablecoins.
• Rain National Trust Bank does not accept deposits, provide consumer accounts, nor issue commercial loans.
• According to the federal GENIUS Act, this proposed bank will be able to manage reserves for approved stablecoin issuers.
• A few days ago, community bankers sued OCC, questioning its rules for supporting encryption of national trust bank licenses.
• OCC indicates that the licensing rules introduced in April were merely to clarify existing authorities and did not expand any powers.

According to the announcement released by Rain on October 5th, the proposed headquarters for Rain National Trust Bank will be located in New York, and it will operate as a separately capitalized subsidiary under the supervision of OCC. Rain itself will still remain a stablecoin payment platform and will not transform into a bank.

Just three days before Rain submitted its application, the Independent Community Bankers of America ( Independent Community Bankers of America , ICBA ) filed a lawsuit in federal court, challenging the legal framework used by OCC for national trust bank licenses. This has drawn Rain's application into an expanding controversy: how should crypto and payment companies enter the federal banking system.

Rain Trust banks can hold reserves and issue stablecoins

The company stated that, if approved, Rain National Trust Bank will carry out three main business lines targeting institutional customers.

The bank will provide fiduciary custody for approved digital assets and US dollars, with customer assets being isolated from the bank's own assets. It can also manage reserves for authorized stablecoin issuers and, in accordance with the GENIUS Act, act as the registered issuer of stablecoins backed by US dollars.

Rain CEO and Co-founder Farooq Malik stated that customers using the company's infrastructure hope that the assets upon which their projects rely are held by a trust institution supervised by a federal regulatory agency. He mentioned that the proposed bank will operate as an independent entity and hold customer assets under the review of OCC.

Rain currently provides infrastructure for stablecoin cards, wallets, and transfer services. The company states that its partners serve millions of end-users and currently rely on a model that combines state-level licenses, external custodians, and third-party stablecoin issuers. This license application aims to incorporate some of these functions into the proposed federal trust bank.

The company has nominated Brandon Soto to serve as the President and Chief Executive Officer of the proposed bank, but this nomination is still subject to review by OCC. Soto previously held the position of Chief Financial Officer at Square Financial Services; this institution is an industrial bank licensed by Block in Utah. Subsequently, he also served as the Chief Financial Officer at Coastal Financial Corporation.

The OCC license will not turn Rain into a traditional bank.

Although the name contains “bank”, the way Rain National Trust Bank operates is not like that of traditional retail banks.

Rain indicates that the institution will not accept deposits, provide checks or savings accounts, offer consumer accounts, nor issue business loans. It will operate as an uninsured national trust bank, which means it will not have deposit insurance from the Federal Deposit Insurance Corporation of the United States (FDIC).

The managed assets will continue to be recognized as customer assets and will not become bank liabilities. Rain indicates that the reserves corresponding to any stablecoins issued by the proposed institution will not be pledged, lent, or reused.

This structure is similar to the applications submitted by national trust banks that are also in the OCC process and focus on encryption services. As previously reported by crypto.news, regulatory authorities have been handling applications from digital asset and payment companies that wish to obtain permissions related to custody, settlement, and stablecoins, without accepting traditional deposits.

Circle has gone even further in this process. In July of this year, this stablecoin issuer received the final approval from First National Digital Currency Bank for OCC; this institution operates under the name of Circle National Trust. At that time, crypto.news reported that the bank would start with fiduciary digital asset custody services and may later provide services to some institutional clients.

Other applicants are still in different stages. After submitting their application in April, Agora received preliminary conditional approval in September; Zerohash submitted a revised application in August after OCC rejected their earlier application.

At the time of application for Rain, encryption licenses are facing legal disputes in court.

At the time of submission by Rain, community banks were challenging the authority of OCC to approve national trust banks, especially when the operations of these institutions exceeded the scope of traditional fiduciary services.

ICBA filed a lawsuit against OCC and Comptroller of the Currency Jonathan Gould on October 2 at the Federal District Court of the District of Columbia. The case is titled “Independent Community Bankers of America v. Office of the Comptroller of the Currency”, with the case number 1:2026cv03441, and is being handled by Judge Carl J. Nichols.

The indictment challenges a rule issued by OCC in March 2026, Interpretation Letter 1176 ( Interpretive Letter 1176), as well as the conditional approval granted to Protego Holdings. ICBA claims that this institution allowed the National Trust Bank to carry out non-fiduciary activities under a limited-purpose license, which has "far exceeded" its statutory authority. The aforementioned allegations have not yet been adjudicated by a court.

ICBA hopes that the court will determine that this March rule and the explanatory letter 1176 are illegal. The lawsuit seeks to prevent OCC from continuing to make further approvals based on this controversial framework, and requests that the court revoke Protego's conditional license approval.

OCC holds different views on its own authorities. In the announcement issued in February announcing this rule, the regulatory authority stated that this change was merely to clarify its long-standing permission for national trust banks to engage in non-fiduciary business while carrying out fiduciary activities. The authority made it clear that this rule neither expanded nor reduced its licensing authority. The rule came into effect on April 1st.

According to Banking Dive, a spokesperson for OCC stated on Monday that the institution does not comment on lawsuits. Monetary Superintendent Gould has previously defended the way the institution handled applications from trust banks, stating that OCC assesses whether the applicants have a reasonable chance of success, rather than adopting a "zero-risk" standard.

Prior to this legal dispute, the banking industry group had been opposing it for several months. crypto.news reported in July that after a series of crypto and fintech companies sought or obtained national trust bank licenses, banking industry representatives were considering taking legal action.

Rain is currently undergoing OCC review and public comment period.

The application for Rain still requires approval from OCC before the proposed bank can begin operations.

The company stated that the review will include a period for public feedback, and the publicly available portion of their application is expected to be posted on the OCC website. Rain has not yet provided a date for OCC to make a decision, while regulatory authorities will carry out the review according to their own schedule.

Rain has collaborated with law firm Paul Hastings to prepare this application. The appointment of Soto as President and CEO still requires review by OCC, and the proposed bank must also obtain all necessary regulatory approvals before starting operations.

The challenge in the federal court is still in its early stages. Public case records show that ICBA filed the indictment on October 2nd, followed by lawyers appearing in court, and subpoenas have been issued electronically to the defendant and federal officials.

Rain indicates that its national trust bank project is a multi-year plan. During the OCC license application review period, the company's existing card, wallet, and fund transfer services will continue to operate; the company also stated that the proposed bank will only begin operations after obtaining all necessary approvals.