Fintech and Crypto Firms Apply for Bank Charters Amid Regulatory Changes
Financial technology and cryptocurrency firms are increasingly seeking state or national bank charters to expand operations under a more favorable regulatory environment. Key points include:
- Notable rise in charter applications as reported by Reuters
- Executives express cautious optimism amid changing regulatory leadership
- Bank charters offer lower borrowing costs and enhanced legitimacy but entail stricter oversight
- Some firms resist banking status due to regulatory constraints, favoring decentralization
- Recent federally regulated crypto banks include Paxos, Anchorage, and Protego
- Rare approval rates for new bank charters: an average of five annually from 2010 to 2023 versus 144 from 2000 to 2007
- Applications declined due to low interest rates and profitability concerns, though streamlined processes are being considered
- Establishing a new bank remains costly, with estimated expenses between $20 million to $50 million