The US president has loosened regulations governing the issuance of new bank charters, allowing his family’s World Liberty Financial to win early approval to establish a banking trust to back its stablecoin

US President Donald Trump’s relatives and their business associates have won preliminary approval to establish a bank amid a deregulation push that is creating a wave of new banks tied to fintech and digital-asset firms, Bloomberg reported on 24 August.

The Trumps received preliminary approval for World Liberty Trust Company, a sister entity to the president’s cryptocurrency firm World Liberty Financial, which issues USD1 stablecoins.

By establishing the bank trust, World Liberty will be allowed to hold assets such as US Treasuries as collateral to back its USD1 stablecoin directly.

The move could “potentially add legitimacy to the stablecoin and could even offer access to cheap funding or a government bailout in the event of a crisis,” Bloomberg noted.

The Trump family’s proposed bank holding company listed Zachary Witkoff, the son of Trump’s close friend and special envoy Steven Witkoff, as the trust’s board chairman.

Bloomberg noted that Zachary Witkoff and other officers listed in the application for the charter have never run a bank before.

One of the proposed directors includes the executive of a car dealership group and a brokerage firm.

Under Trump, the Office of the Comptroller of the Currency (OCC) has loosened banking regulations, leading to a wave of approvals for new banks, including many related to the crypto and fintech industries.

World Liberty joins stablecoin issuer Circle, consumer bank Nu Holdings Ltd., and cryptocurrency exchange Coinbase Global Inc., which have received approval in recent months from the federal banking oversight agency.

The OCC has approved 22 bank charter applications since Trump returned to office 19 months ago, more than the number it issued in the past five years combined, data from the agency shows.

Jonathan Gould, whom Trump appointed as head of the regulatory agency, said in testimony to Congress in June: “The OCC is open for business again.”

Trump’s role in loosening OCC regulations comes amid accusations of conflicts of interest for the president.

“That’s led to concern among Democratic lawmakers that USD1 could serve as a pathway to currying favor with the president while simultaneously enjoying a light touch from regulators,” Bloomberg wrote.

“Critics are missing the point: World Liberty Financial is embracing regulation, not avoiding it,” claimed David Wachsman, a spokesman for the company.

“A national charter would place World Liberty Trust Company under permanent federal oversight by the OCC – well beyond the duration of the Trump administration.”

Prominent stakeholders, including the president’s son, Eric Trump, and a businessman tied to the Abu Dhabi royal family, have reportedly signed agreements limiting their direct management influence over the bank.

Bloomberg drew parallels between the current loosening of banking regulations and events from the 1980s and 1990s known as the “Savings and Loan Crisis.” Over 1,000 small banks and lenders in the US collapsed, eventually costing taxpayers $132 billion to return stolen money to depositors.

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Via https://thecradle.co/articles/trump-linked-crypto-firm-wins-preliminary-approval-to-establish-bank