Zerohash Faces Setback in Bid for U.S. Trust Bank Charter – Plans for Revised Application

This surprised me: Zerohash, the promising crypto infrastructure company handling digital asset management for Morgan Stanley’s ETrade platform, just hit a roadblock. U.S. regulators have provisionally rejected its application for a trust bank license. While the official statement notes authorities aren’t yet convinced, Zerohash is doubling down—planning to revise and resubmit its application. And in my view, that’s exactly the right move.
Why Does Zerohash Want a Banking License?
Zerohash isn’t new to the game. Founded in 2021 after acquiring Core Scientific, the company has carved out a key role in crypto infrastructure, offering custody, liquidity, and settlement solutions—especially for institutional investors. Its partnership with Morgan Stanley proves its traction in the space.
But here’s the catch: As an infrastructure provider, Zerohash isn’t subject to banking regulations. That limits its ability to directly custody customer assets or handle fiat transactions smoothly. A trust bank license would unlock game-changing capabilities—direct asset management, faster fiat settlements, and smoother compliance for institutional clients.
Why Was the Application Rejected—and What It Means
The exact reasons weren’t disclosed, but experts have some educated guesses:
1. Regulators Aren’t Convinced Yet
Agencies like the OCC and Federal Reserve remain skeptical of crypto banks. While players like Anchorage Digital and Kraken Bank have licenses, the hurdles for compliance, risk management, and capital reserves are massive. Zerohash must prove it can handle cybersecurity, AML, and operational stability flawlessly—and that’s no small feat.
2. Patchwork U.S. Regulations
States like Wyoming and Texas are forward-thinking with crypto-friendly charters, but federal oversight is fragmented. The OCC has issued guidance on payment stablecoins, but no unified framework exists for crypto trust banks. Zerohash may have landed in a legal gray area where regulators are still figuring out how such a license fits.
3. Crypto Still a Political Ho



t Button in the U.S.
Despite growing institutional interest, skepticism persists. The SEC’s Gary Gensler has repeatedly signaled that many crypto assets could be deemed unregistered securities. A banking license for a crypto firm might be seen as a systemic risk.
Zerohash Stays Optimistic—But Explores Alternatives
Despite the setback, Zerohash remains resilient. In its statement:
“We’re disappointed but view this as part of a longer journey. Our team is urgently refining our submission to meet all requirements while also exploring alternative paths to expand our services.”
Experts suggest Zerohash could pivot to a crypto-friendly state like Wyoming (home to Kraken Bank) or partner with an existing chartered bank to offer certain services.
Why This Matters—and What It Means for U.S. Crypto
If Zerohash succeeds in securing a license, the ripple effects would be significant:
- Institutional investors would gain a trusted, regulated solution for holding Bitcoin and other digital assets.
- Traditional banks could more easily enter crypto by leveraging Zerohash’s infrastructure.
- The U.S. could reclaim its standing as a global crypto hub, competing with forward-thinking jurisdictions like Singapore, Switzerland, and the EU.
At the same time, the case underscores how slow and convoluted crypto regulation remains in the U.S. While countries like El Salvador adopt Bitcoin as legal tender, American firms still grapple with bureaucratic hurdles and regulatory ambiguity.
Final Thoughts: Progress, Not Perfection
Zerohash’s rejected application isn’t a reason to give up—it’s a reminder of the hurdles crypto firms face in the U.S. The fact that it’s already refining its approach shows strategic thinking over knee-jerk reactions.
What the crypto market in the U.S. needs right now is patience, persistence, and a willingness to navigate regulatory complexity. Zerohash may have stumbled, but I’m betting it won’t stay down for long. And perhaps that’s the mindset needed to push the U.S. back to the forefront of global crypto infrastructure.