OCC Issues Interpretive Letter Confirming Preemption of State Money Transmission Laws for Uninsured National Trust Banks
The Office of the Comptroller of the Currency (OCC) has issued Interpretive Letter 1192, affirming that an uninsured national trust bank engaged in digital asset business activities is not required to obtain state money transmission licenses or otherwise comply with state money transmission laws when engaging in federally authorized activities. Interpretive Letter No. 1192 is the latest development in an evolving standoff between the federal government and the states over the regulation of FinTechs.
Background on Regulatory Landscape Leading to Interpretive Letter 1192
Over the last several months, tensions between states and the OCC have continued to rise over the wave of federal trust company applications submitted by FinTechs and subsequent OCC trust charter approvals.1 This diversity of views is fueled by the OCC's position that national trust banks are authorized to engage in both fiduciary and non-fiduciary activities, which makes obtaining a federal trust company charter a more appealing option to FinTechs than in previous presidential administrations.
As highlighted in our previous alerts, states have made efforts in recent years to unify their non-bank regulatory regimes, such as adopting the Model Money Transmission Modernization Act (MMTMA), since resisting the OCC's efforts during President Trump's first term to establish a national FinTech charter. Numerous state FinTech laws/regulations, including the MMTMA, exempt federal trust banks solely to the extent that they are federally insured, and national trust banks are generally uninsured.2
The renewed focus on national trust banks, including among entities that currently maintain state money transmission licenses, has set the stage for the scope of federal preemption to be further tested. While Interpretive Letter No. 1192 is not the first time in recent years that the OCC has opined on federal preemption of state money transmission laws for uninsured national trust companies, this letter shores up potential gaps left by the OCC's prior related interpretations by explicitly stating that an uninsured national trust bank is "not required to comply with state money transmitter licensing requirements."
In May 2020, the OCC issued Interpretive Letter 1167 which determined that state money transmission laws were preempted as applied to an uninsured trust company exercising its fiduciary powers. This interpretive letter was issued prior to the OCC's controversial Interpretive Letter 1176, which affirmed the authority of national trust banks to engage in activities permissible for state trust companies/state trust banks, even if such state-authorized activities are non-fiduciary in nature.3 Because Interpretive Letter 1167 focused on federal preemption in the context of an uninsured national trust bank's exercise of fiduciary activities, questions remained regarding the scope of federal preemption for non-fiduciary activities engaged in by national trust banks.
Summary of OCC's Interpretive Letter 1192
The OCC issued Interpretive Letter 1192 at the request of a national trust company authorized by the OCC to engage in both fiduciary and non-fiduciary activities following a state's objection to the newly approved national trust company surrendering its money transmitter license. The state (Iowa), which has generally adopted the exemption provisions of the MMTMA, claimed that because the national trust bank's deposits were uninsured, the national trust company did not meet the state's money transmission law's exemption qualifications and accordingly, needed to continue to maintain its money transmission license.
In reaching its decision, the OCC first concluded that regardless of the scope of state law exemptions, state money transmitter licensing laws are preempted as applied to national trust banks because they prevent or significantly interfere with the national bank's exercise of its federally authorized powers. The OCC cited longstanding precedent that the National Bank Act (NBA) ordinarily preempts contrary state law, including state licensing laws, and rejected the notion that a state may limit its licensing exemptions to a subset of national banks, such as only those whose deposits are federally insured.
The OCC further noted that subjecting national trust banks to state money transmission laws, which authorize state banking departments to periodically examine licensees and require licensees to produce various books and records, would contravene the NBA as these laws would vest states with visitorial authority over national banks in a manner inconsistent with the OCC's exclusive national bank visitorial powers.4
Notably, the OCC stated that because state money transmitter laws do not qualify as state consumer financial laws, Interpretive Letter 1192 is not a preemption determination subject to the heightened procedural requirements of 12 U.S.C. § 25b.
Looking Beyond Interpretive Letter 1192
In practice, Interpretive Letter 1192 represents a direct blow to states' authority to oversee FinTechs as it, practically speaking, expands the national trust company exemption contained in many states' money transmission laws to include uninsured national trust companies.
Despite the OCC's unambiguous conclusion, given the letter's significant impact, it is possible that we will continue to see a threat of state and industry challenges on issues related to the authority of national trust banks to engage in non-fiduciary activities under the NBA.
Accordingly, it is important for FinTechs to continue to monitor the increasingly complex balancing act between state and federal regulation as applied to their intended activities.
Stinson LLP attorneys are closely monitoring federal and state developments impacting national trust banks in order to advise clients on regulatory structures that best align with their business objectives.
For more information on the authority of national trust banks and related considerations under state financial services laws, please contact Heidi Wicker, Audrey Carroll, Matthew Grimaldi, Evan Murlette or the Stinson LLP contact with whom you regularly work.
1. OCC Finalizes Amendments to National Bank Chartering Rule to Affirm the Authority of National Trust Banks to Engage in Non-Fiduciary Activities, Stinson LLP (March 10, 2026).
2. Model Money Transmission Modernization Act, Conference of State Bank Supervisors, Section 3.01(g).
3. Interpretive Letter 1167 (May 20, 2020); Interpretive Letter 1176 (January 11, 2021).
4. 12 U.S.C. § 484(a) (provides that "[n]o national bank shall be subject to any visitorial powers except as authorized by Federal law.")
