Can Crypto Trust Firms Compete with Banks in US Derivatives Settlements?

Regulated cryptocurrency custodians and digital asset infrastructure providers are positioning themselves to tap into the lucrative derivatives settlement industry following a key regulatory concession from the Commodity Futures Trading Commission (CFTC). On November 5, the CFTC’s Division of Clearing and Risk issued no-action relief in response to an October 29 request submitted by derivatives clearinghouse Nodal Clear. The decision permits clearinghouses to utilize trust companies for daily settlement operations, provided these entities adhere to the exact evaluation and monitoring criteria traditionally applied to standard settlement banks.

This regulatory shift resolves a longstanding administrative discrepancy between statutory federal commodities law, which explicitly allows customer funds to be safeguarded at either banks or trust companies, and CFTC Regulation 39.14, which had narrowly defined settlement banks solely as conventional banks. The resolution opens the door for qualified institutional crypto entities to service massive transaction volumes. For context regarding the sheer scale of the sector, derivatives exchange operator CME Group moved an average of $8.7 billion per business day through its clearing infrastructure during the first half of 2026, marking an increase from $6.7 billion daily throughout 2025. While those metrics reflect the gross movement of gains and losses across clearing members rather than direct banking fee yields, they highlight the substantial liquidity flows now accessible to specialized trust companies.

Crypto Firms Expand Institutional Footprint and National Charters

The CFTC’s determination closely aligns with ongoing initiatives across digital asset firms seeking to build bridges into established financial markets. Nodal Clear had previously partnered with Coinbase in 2025 to introduce USD Coin (USDC) into domestic futures trading, a program under which Coinbase Custody Trust was slated to facilitate daily settlement duties. Expanding its presence further, Coinbase saw its national trust bank charter take effect on November 6. This authorization allows Coinbase National Trust Company, an entity distinct from Coinbase Custody Trust, to deliver federally supervised digital asset custody.

Parallel moves are unfolding across the institutional crypto ecosystem. On November 4, BitGo introduced its Global Markets division, integrating execution for derivatives trading, collateral management, financing, and end-to-end settlement services. Furthermore, companies including Ripple, Circle, Crypto.com, and Stripe-owned Bridge have secured U.S. national trust bank authorizations from the Office of the Comptroller of the Currency (OCC), underscoring a broad push by crypto companies to secure federally regulated footing across institutional banking workflows.

Banking Industry Pushback and Competitive Parity

The aggressive expansion of digital asset companies into trust operations has sparked resistance from established commercial banking representatives. In October, the Independent Community Bankers of America initiated a legal challenge against the OCC. The lawsuit claims the agency’s national trust bank charter guidelines permit digital asset firms to execute bank-like activities without shouldering the full spectrum of operational and capital compliance demands imposed on traditional depository institutions.

Despite these criticisms, industry representatives maintain that trust institutions are merely competing under established legal boundaries. Cody Carbone, CEO of The Digital Chamber, noted that the CFTC’s relief creates parity rather than an unfair advantage, stating that the measure gives clearinghouses broader operational choices without restricting conventional banks from competing for client relationships. “A trust company charter is not a regulatory shortcut,” he said.

Regulatory Fragility and Shifting Political Dynamics

While the business runway for trust companies has widened, legal experts warn that the mechanism of the CFTC’s intervention creates operational vulnerability. Because the relief arrived as a staff no-action letter rather than a formal, codified rule amendment passed via public notice-and-comment procedures, the position lacks permanent statutory weight and can be rescinded unilaterally at any time.

“A change in Commission leadership could withdraw the CFTC Letter. More formal Commission action, such as amending the regulation, would be necessary to avoid this potential risk,” Jordan Yeagley, a shareholder at Buchanan Ingersoll & Rooney, told Cointelegraph.

This structural impermanence coincides with significant political and administrative transition. CFTC Chair Michael Selig continues to serve as the sole active commissioner within an agency designed by statute to be directed by a bipartisan panel of five members. Selig has led the regulator individually since December 2025, leaving four open seats as digital asset regulation intensifies. Simultaneously, the broader legislative landscape transformed following the November 3 U.S. midterm elections, which resulted in Democrats securing majorities in both chambers of Congress. The incoming Congress convening in January will wield oversight power through the House and Senate Agriculture Committees, alongside control over Senate confirmations for the four open CFTC commissioner seats. Notably, Senator Sherrod Brown, who won re-election in Ohio despite more than $60 million in political spending directed against him by crypto-backed political action committees, could assume an influential post on the Senate Agriculture Committee.

Why This Matters

The CFTC’s move to harmonize its settlement bank definitions with federal commodities law grants clearinghouses much-needed operational flexibility while creating a lucrative pipeline for non-bank trust entities. For digital asset companies such as Coinbase, BitGo, and Circle, securing access to clearing operations allows them to capture institutional capital, facilitate stablecoin settlement in regulated derivatives markets, and legitimize national trust structures. However, relying on revocable staff-level relief leaves these institutional investments exposed. Until formal rulemakings are adopted, any political realignment within the CFTC or aggressive congressional oversight from the incoming legislative session could quickly alter the regulatory permissions governing digital asset custodians in centralized finance.

Frequently Asked Questions

What did the CFTC decide regarding derivatives settlements?

The CFTC’s Division of Clearing and Risk issued a no-action letter clarifying that clearinghouses such as Nodal Clear can use state and national trust companies for daily settlements without facing staff enforcement recommendations, provided the institutions satisfy the same rigorous monitoring and oversight frameworks applied to traditional banks.

Why are conventional banking organizations challenging trust company charters?

Groups like the Independent Community Bankers of America have filed legal action against the OCC, arguing that national trust bank charters allow digital asset firms to perform certain core banking activities without adhering to the comprehensive set of regulations, capital requirements, and safeguards that apply to commercial banks.

Why is the CFTC’s no-action relief considered potentially vulnerable?

A no-action letter represents staff discretion rather than a binding administrative rule change. Because it did not go through the formal public notice-and-comment process required to alter Regulation 39.14 permanently, subsequent CFTC leadership or a fully staffed commission could withdraw the relief at their discretion.