Lorum Applies for National Trust Charter
Lorum, a multicurrency clearing and cash management platform, has submitted an application for a national trust charter with the Office of the Comptroller of the Currency. This move, as detailed in documents shared with Banking Dive, could potentially open up new opportunities for the company.
Benefits of a National Trust Charter
Securing a national trust charter would allow Lorum to apply for a Federal Reserve account, eliminating the need for a partner bank and enabling the launch of additional fiduciary services. According to founder George Davis, this strategic decision aligns with the company’s vision of becoming a bank for other banks, akin to a modernized version of BNY Mellon.
Lorum’s Expansion Plans
Currently operating out of Dubai, Lorum specializes in providing clearing, custody, and cash management services for regulated financial institutions, such as payroll operators and payment services providers. The company is now looking to establish its headquarters in New York City, signaling its transition towards becoming Lorum National Trust Bank.
While Lorum’s customer base primarily consists of European financial institutions and small to mid-market U.S. banks and payments companies, the company facilitates the movement of U.S. dollars on a global scale. As Davis highlighted, the ubiquity of the U.S. dollar in international trade underscores the importance of Lorum’s services in facilitating cross-border transactions.
Financial Offerings and Industry Recognition
With the potential trust charter in place, Lorum aims to introduce fixed-income products, allowing customers to earn interest on idle balances held on the platform for foreign exchange purposes. Davis, who also co-founded stablecoin infrastructure startup BVNK, has garnered industry recognition, with Mastercard recently announcing its acquisition of BVNK for $1.8 billion.
Regulatory Landscape and Trust Bank Activities
Lorum’s application for a national trust charter comes amidst a wave of similar submissions to the OCC. While some bank trade groups have voiced concerns about the trend, Davis asserts that Lorum’s operations align with the core activities of a trust bank, centered on safeguarding and facilitating the management of client funds.
As of the latest update, the OCC’s website has not yet reflected Lorum’s application status, underscoring the ongoing regulatory review process surrounding the company’s expansion plans.
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