Wednesday, March 19

The pro-crypto Trump administration has become conducive to many crypto firms seeking to register as bank charters to expand businesses.

Several fintech and crypto-focused companies are applying for state or national bank charters, Reuters reported on Tuesday. These companies have been hoping to gain licenses that were slow or more unlikely to be approved under previous administrations.

Reuters cited more than six anonymous executives and several regulatory lawyers, who emphasized the significant increase in bank charter applications.

Alexandra Steinberg Barrage, a partner at Troutman Pepper Locke law firm, noted that it is working on several such applications.

“Is it in full swing yet? I don’t think so. Our clients are being cautiously optimistic, they’re waiting for things to settle.”

Bank Charter License Would Give “More Legitimacy” to Crypto Businesses

The push would be a significant step for crypto and fintech companies as the license would allow them to offer a wide-range of financial services and products.

According to Carleton Goss, partner at law firm Hunton Andrews Kurth, a license can give “more legitimacy to the business in the eyes of customers.”

“This will also allow firms to reduce their borrowing costs by drawing on deposits, another big advantage,” Goss added. Further, a bank charter recognition would also cut the capital costs in doing business in certain cases. However, crypto firms are subject to dealing with more regulatory checks if they become banks.

Additionally, new crypto-centric banks, if licensed, would target and carter specific customer needs, boosting industry competition, sources told the publication.

“Online companies know that they will be coming under greater regulatory scrutiny,” Goss noted.

“It makes sense for them to get ahead of the curve, and in turn, get more credibility and capital at a lower cost by applying for a charter.”

‘Uptick’ in Bank Charter Licensing Attempts

Per S&P Global data, there were very few new bank charters, with only five being approved by regulators between 2010 and 2023. However, between 2000 and 2007, 144 bank charters were approved per year.

According to an open letter by regulatory lawyers, some applications were eventually withdrawn, given the time taken for regulators to approve.

The “uptick” in the recent bank charter applications from digital asset firms comes after Trump was sworn-in as the 47th president. His “newly-installed regulators” have sent positive signals to fintechs, says Nathan Stovall, director of the financial institutions research at S&P Global.

“We haven’t seen a flurry of charter applications since the financial crisis period, but we certainly saw more in the first Trump administration,” Stovall added.

However, executives also highlighted that there is still “rigorous licensing processes in place” and the charter licensing activity is just picking-up.

The post Crypto Firms Seek to Register as State, National Bank Charter Under Trump Regime: Reuters appeared first on Cryptonews.


https://cryptonews.com/news/crypto-firms-seek-to-register-as-banks/

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