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Morgan Stanley's infrastructure partner Zerohash rebuffed in pitch to be U.S. trust bank
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- DeepHorus
Zerohash, a crypto infrastructure provider that handles digital asset operations for Morgan Stanley's E*Trade, has failed to secure a U.S. trust bank charter in its initial attempt. The Office of the Comptroller of the Currency (OCC) returned the Chicago-based company's application, citing "material deficiencies" under its policy. The move, which occurred on July 17, effectively ends the current charter bid without a formal denial.
The application was part of a larger rush by crypto-focused firms to obtain trust bank charters following the passage of the GENIUS Act, which established a federal framework for stablecoin issuers. Zerohash had submitted its filing in March, hoping to join dozens of companies that have received provisional approvals. The firm's backend services are used by key traditional financial institutions, underscoring the growing intersection of crypto and mainstream banking.
According to OCC policy, a returned application means the filing was materially deficient, but unlike the flat-out denials received by fintech firms Wise and Bunq, no detailed explanation is given. Zerohash did not publicly disclose the return at the time, nor did it voluntarily withdraw the filing. The company now says it plans to refile by the end of the month with a narrower scope.
In a Wednesday statement, Zerohash characterized the return as an administrative step taken in coordination with the OCC. The company emphasized that the decision is not substantive and does not affect its current operations, which continue under existing regulatory approvals. It had previously advertised executive roles at a "Zerohash National Trust Bank" with a pending charter.
The rebuff highlights the regulatory scrutiny facing crypto banking ventures, even those backed by major Wall Street players. While Morgan Stanley declined to comment, the outcome suggests the OCC is carefully vetting applications for digital asset trust activities. The firm's resubmission will focus on "a more focused approval of national trust activities aligned with our intended rollout timeline."
Zerohash expressed confidence in a "swift review of the resubmission." If successful, it would join a growing number of trust banks handling digital assets, potentially paving the way for greater institutional participation in crypto markets. For now, the company remains in a waiting game with regulators.
