On May 12, the Office of the Comptroller of the Currency (OCC) issued a significant interpretive letter confirming that Fidelity Digital Assets, National Association (the recently converted national trust bank formerly known as Fidelity Digital Assets Service, LLC) is not required to hold state money transmitter licenses to conduct its federally authorized activities. The OCC concluded that the National Bank Act preempts any state money transmitter licensing requirement as applied to a national bank.

Until December 12, 2025, Fidelity Digital Assets operated as a New York-chartered limited liability trust company and held money transmitter licenses in numerous states, including Iowa. On that date, the OCC approved its conversion to an uninsured national trust bank under 12 U.S.C. § 27(a). Concurrent with the conversion, the Bank surrendered its Iowa money transmitter license.

Iowa pushed back. Its money transmitter statute exempts banks and trust companies from licensing, but only if they hold federally insured deposits. Because Fidelity Digital Assets is an uninsured national bank, Iowa argued the exemption did not apply and requested a legal basis for the license surrender. Fidelity Digital Assets responded that the National Bank Act preempts Iowa’s requirements and asked the OCC to confirm that position.

The OCC’s analysis of whether a state can require a national bank to obtain a state money transmitter license as a condition of engaging in federally authorized activities, including cryptocurrency custody, trade execution, stablecoin issuance, and related digital asset services, rested on two independent and well-established pillars of federal banking law:

1. National Bank Act Preemption

Federal law authorizes national banks to conduct a broad range of activities on a national basis. Any state law that “prevents or significantly interferes” with a national bank’s exercise of its federally authorized powers is preempted. 

The OCC reasoned that requiring a national bank to obtain a state money transmitter license, even as a threshold condition to operating, would impermissibly condition the Bank’s federal authority on state approval. At the extreme, a state could veto federal authority outright by denying or revoking a license. Both outcomes are squarely preempted. This conclusion applies to any state’s money transmitter licensing regime, including states that limit their licensing exemptions to a subset of national banks (such as Iowa’s insured-deposits-only carveout).

2. Exclusive Federal Visitorial Authority

Separately, 12 U.S.C. § 484 vests the OCC with exclusive visitorial authority over national banks. “No national bank shall be subject to any visitorial powers except as authorized by Federal law.” Iowa’s money transmitter statute grants the state agency robust supervisory jurisdiction over licensees, including the power to demand books and records, conduct periodic examinations, take enforcement actions, and even place a licensee into receivership. Applying that regime to a national bank would be “fundamentally inconsistent” with the OCC’s exclusive visitorial powers and is therefore impermissible on independent grounds.

Together, these two bases lead to a clean and sweeping conclusion: a national bank may conduct its federally authorized activities in any state without a state money transmitter license, regardless of whether it qualifies for any state-law exemption.

Our Take

The OCC’s conclusion here was entirely expected. The preemption framework for national banks is well-settled, and the OCC’s letter largely restates principles the Supreme Court and federal courts have applied for decades. That said, one nuance in this letter deserves closer attention: state-chartered trust banks are in a very different position.

Unlike national banks, state trust companies and state-chartered banks do not benefit from National Bank Act preemption. Their ability to avoid state money transmitter licensing requirements depends entirely on how each individual state defines “bank” or “trust company” in its money transmission statute and those definitions vary considerably.