Dan Burstein

GC @MagicEdenUS | Crypto/fintech lawyer since '18 | ex-GC @Paxos | Reformed regulator (mostly) | Dad joke maximalist 🤝

[Dan Burstein @Dan_Burstein]

@DiceyHQ @MrBeast Don't be like Costanza. Be a functioning member of society. Go Team Blue.

[Dan Burstein @Dan_Burstein]

@DougieDeLuca https://t.co/b9RndPI0zo

[Dan Burstein @Dan_Burstein]

Great piece about where we are in the crypto adoption cycle. If core crypto use cases just fold into broader financial infrastructure, what does that mean for standalone project tokens? And for projects with both tokens and equity, could equity actually reclaim its primacy?

[Dan Burstein @Dan_Burstein]

Great piece about where we are in the crypto adoption cycle. If core crypto use cases just fold into broader financial infrastructure, what does that mean for standalone project tokens? And for projects with both tokens and equity, could equity actually reclaim its primacy?

[Dougie @DougieDeLuca]

https://t.co/q5LVbaaPpx

[Dan Burstein @Dan_Burstein]

@MagicEden @DiceyHQ 👀

[Dan Burstein @Dan_Burstein]

@AlexH_Johnson https://t.co/LCcmJqJq8P

[Dan Burstein @Dan_Burstein]

Love this legal parsing of a regulatory application, but there's nuance. A national trust bank cannot take deposits (that's depository banks) nor issue T-bills (that's Treasury) nor structure a repo (typically a securities dealer). 1/

[Dan Burstein @Dan_Burstein]

Fully agree the brass ring is access to a Fed master account, if the Fed allows it. The 2022 Account Access Guidelines set a tiered review; trust banks can apply, but scrutiny is high. Until then, routing through insured depositories and dealers is how reserves get placed. 4/

[Dan Burstein @Dan_Burstein]

Love this legal parsing of a regulatory application, but there's nuance. A national trust bank cannot take deposits (that's depository banks) nor issue T-bills (that's Treasury) nor structure a repo (typically a securities dealer). 1/

[Alex Johnson @AlexH_Johnson]

Back in June, Circle applied for a national trust bank charter.

Among the many benefits of such a charter (federal preemption, avoiding BHCA compliance, possible access to a Fed master accounts, etc.) is the ability for the stablecoin issuer to custody its own reserves.

Circle said that was what it was planning to do:

"If approved, First National Digital Currency Bank, N.A. would be authorized to operate as a federally regulated trust institution, subject to OCC oversight, and would oversee the management of the USDC Reserve on behalf of Circle's U.S. issuer."

Makes sense!

However, Anchorage Digital, which got a national trust bank charter all the way back in 2021 and, after the passage of the GENIUS Act, expanded into stablecoin issuance, recently announced that it is going to use U.S. Bank to custody its stablecoin assets.

Why?

There are two primary reasons I can see:

1.) The OCC has fiduciary rules and guidance that restrict self-dealing and the self-deposit of fiduciary funds. The agency generally pushes banks to use appropriate third-party custodians for client/beneficiary assets, absent narrow conditions.

2.) Per the GENIUS Act, payment stablecoin reserves must be held in a relatively narrow set of assets (cash at insured banks/credit unions, short-dated Treasuries, and certain repos/MMFs). In virtually all cases, payment stablecoin issuers will choose to hold their reserves in a mix of these assets, including cash. The trouble is, even if you could get around the OCC's self-dealing rules, national trust banks are not allowed to take in deposits. They can't custody the cash backing their own stablecoins!

Which brings us back to that quote from Circle's press release (emphasis mine):

"If approved, First National Digital Currency Bank, N.A. would be authorized to operate as a federally regulated trust institution, subject to OCC oversight, and would oversee the management of the USDC Reserve on behalf of Circle's U.S. issuer."

Oversee the management of ...

They never actually said that they were going to hold all of (or even any of) USDC's reserves. They may just manage the partner banks (like BNY Mellon) that already do so.

So, it turns out that even though Circle (and other stablecoin issuers) are pursuing national trust bank charters, which were explicitly designed to facilitate the custody of assets, they likely will not custody their own stablecoin reserves (at least not fully).

Instead, it appears that Fed master accounts are the real prize that these companies are aiming at.

[Dan Burstein @Dan_Burstein]

The OCC has tremendous discretion under relevant statutes and OCC rules and guidance to authorize a national trust bank to custody assets in this manner. 3/

[Dan Burstein @Dan_Burstein]

@kkirkbos I guess this doesn't count as touching grass. Perhaps touching scales?

[Dan Burstein @Dan_Burstein]

@amandatums @BankingGOP Great to see! Nice work to you and @fund_defi for the successful advocacy

[Dan Burstein @Dan_Burstein]

@amandalfischer @NYDFS Again, the settlement agreement does not say that Paxos commissioned the report and then failed to control, monitor or escalate. "Facilitating" is a serious allegation. As fellow lawyers, I think we both know that words matter.

[Dan Burstein @Dan_Burstein]

https://t.co/Bcm1bzA7wB

[Dan Burstein @Dan_Burstein]

Bullish speech by SEC Chair Atkins today, launching "Project Crypto." Promises to issue clear guidance on what is a security, make the world safe for tokenized securities,

[Dan Burstein @Dan_Burstein]

clarify custody rules, allow for trading securities alongside non-securities, cut red tape, update regs to allow for decentralized/disintermediated market activity, and move forward with innovation exemptions. Time to build!

[Dan Burstein @Dan_Burstein]

Still: ✅ major win for digital asset oversight.

But should the CLARITY Act follow suit… Maybe we’ll need a mock conference committee for the theatrical satisfaction. 🎭 (Who’s bringing the C-SPAN popcorn? 🍿)

[Dan Burstein @Dan_Burstein]

The House passed the STABLE Act.
The Senate passed the GENIUS Act.
And then…
😶 No conference committee
🤷 No compromise
✅ The House just adopted the Senate version. Fast and clean.

[Dan Burstein @Dan_Burstein]

Sure, it’s efficient. But for a brief time, we were on the brink of a true civics nerd dream 🤓 — a conference committee! A live-action example of how Congress is supposed to work.

[Dan Burstein @Dan_Burstein]

For a moment, it looked like we were headed for a full-on West Wing episode:
🏛️ House vs. Senate
📜 Competing bills
🤝 Conference negotiations
🚶‍♂️ Hallway walk-and-talks
Democracy in motion. 🇺🇸

[Dan Burstein @Dan_Burstein]

The GENIUS Act is a massive step forward for digital asset policy. But the biggest disappointment? What didn’t happen. 👇