The Trump administration’s favorable stance on cryptocurrency has opened the door for many crypto firms to apply for state or national bank charters, allowing them to expand their businesses. According to a report by Reuters, several fintech and crypto-focused companies are seeking licenses that were previously difficult to obtain.
The increase in bank charter applications has been significant, with more than six executives and regulatory lawyers confirming the trend. Alexandra Steinberg Barrage, a partner at Troutman Pepper Locke law firm, mentioned that they are working on several applications for bank charters.
The approval of a bank charter would provide more legitimacy to crypto businesses and allow them to offer a wider range of financial services and products. Carleton Goss, a partner at law firm Hunton Andrews Kurth, emphasized that having a license could reduce borrowing costs and capital requirements for these firms. However, becoming a bank would also subject crypto companies to additional regulatory scrutiny.
If licensed, new crypto-centric banks could cater to specific customer needs and increase competition in the industry. Goss pointed out that online companies are aware of the increased regulatory scrutiny and are seeking to establish credibility and access capital at a lower cost by applying for a charter.
While there has been a recent uptick in bank charter applications from digital asset firms, data from S&P Global shows that there were very few new bank charters approved between 2010 and 2023. The positive signals from Trump’s regulators have encouraged fintech companies to pursue bank charters, but executives caution that the licensing process is still rigorous.
Overall, the Trump administration’s pro-crypto stance has created opportunities for crypto firms to formalize their banking operations and gain credibility in the financial industry. The trend of applying for bank charters is expected to continue as companies navigate the regulatory landscape and seek to expand their businesses.