BitGo CEO calls trust charter a solution, not a threat, in letter to Senator Warren

BitGo CEO Mike Belshe sent an open letter to U.S. Senator Elizabeth Warren on May 19, rebutting her criticism of the Office of the Comptroller of the Currency (OCC) for granting trust bank charters to crypto firms. Warren had previously suggested that such approvals could potentially violate banking laws. In his letter, Belshe argued that the term "crypto bank," used by Warren, is a rhetorical phrase with no legal definition. He explained that BitGo does not lend or co-mingle client assets, instead holding them separately under a fiduciary duty. He contrasted this with depository banks, which operate on a fractional reserve model by lending out customer deposits. According to Belshe, regulations like deposit insurance and capital requirements exist to address the risks inherent in that structure. Applying deposit insurance to a custodial bank that holds assets on a one-to-one basis, he contended, is like "requiring someone who only rides the bus to have car insurance." Belshe further noted that cases of consumer harm involving firms like FTX, Celsius, and Voyager all occurred at institutions that lacked a fiduciary duty. "The trust bank charter is the solution, not the threat," he concluded.