Thread by @CaitlinLong_

1/ I DUG INTO the Fed's latest master account list, released last night. The big news is what's happening with OCC-chartered trust companies--2 new ones applied for Fed master accounts. This is noteworthy for several reasons, explained below. Data here: federalreserve.gov/paymentsystems…

2/ But first, among the ~430 Fed master account holders that are not FDIC insured (or equivalent), 11 are trust companies chartered by the OCC:

3/ And 4 applicants for new Fed master accounts are OCC-chartered trust companies (of which two were crypto custodians whose applications went inactive amid #OperationChokePoint2.0👇--Paxos "withdrew" in Jan 2024; & Protego's charter approval "expired" in Feb 2023, per the OCC).

4/ The two new applicants--both very recent--are @Paycom & Fundbank. (Note Paycom's competitor, @ADP Trust Co, has had a Fed master account since 2019--see above). Why are these new applications newsworthy?

5/ Because trust cos aren't legally eligible for Fed master accounts, since they're not depository institutions. The Fed has a problem tho--it has granted legally-ineligible trust companies Fed master accounts in the past. Specifically...

6/ ...in addition to the 11 OCC-chartered trust companies that currently have Fed master accounts, 4 state-chartered trust companies have them. (Lawyers have differing opinions over whether OCC trust companies are eligible thru a different legal path--as Fed member banks--but...

7/ ...that path opens a different can of worms since it disadvantages states' trust charters in favor of OCC ones, w/ attendant issues related to the dual banking system). Several current holders of Fed master accounts aren't legally eligible for them, but have them nonetheless.

8/ Thanks to @SenToomey forcing the Fed to start publicly disclosing Fed master account holders, there's finally light shining on all this.

So, how will the Fed handle the two new OCC trust company applicants? It's a good question.🤔