Crypto’s Banking Ambitions Gain Momentum as Regulatory Tides Turn Under Donald Trump

• Fintech and cryptocurrency companies are actively seeking state and national bank charters.
• Securing a bank charter allows firms to lower borrowing costs, gain customer legitimacy, and access deposits.
• Despite the benefits, obtaining a bank charter is expensive and requires compliance with stringent anti-money laundering regulations.

Fintech and cryptocurrency firms are increasingly seeking state and national bank charters, drawn by the promise of lower borrowing costs, greater legitimacy, and direct access to customer deposits.

The trend has particularly accelerated under Donald Trump’s more industry-friendly administration, a stark shift from the previous era, when regulators were hesitant to grant such approvals.

Fintech and Crypto Firms Weigh Bank Charters Amid Regulatory Shifts

Interest in bank charters among fintech and crypto firms has grown significantly, according to industry experts.

Alexandra Steinberg Barrage, a partner at law firm Troutman Pepper Locke, told Reuters that her team is handling multiple applications.

While firms are showing greater interest, she noted that many are proceeding cautiously, waiting for the new administration to finalize key regulatory appointments before committing fully.

Other sources involved in the charter application process echoed this sentiment, telling Reuters that discussions and preliminary work have accelerated. However, they added that it remains unclear how many firms will ultimately follow through.

For fintech and crypto companies, securing a bank charter offers clear advantages.

Unlike traditional funding models that rely on venture capital or high-cost lending, a charter enables firms to accept deposits directly, lowering borrowing costs and improving financial stability.

It also enhances credibility in an industry that has faced increasing scrutiny.

Many companies see obtaining a charter as a strategic move to get ahead of potential regulatory crackdowns.

One industry analyst told Reuters that digital finance firms understand tighter oversight is coming and are seeking bank status to gain legitimacy, attract investment, and reduce operational costs.

Still, the process remains expensive and highly regulated, requiring firms to meet stringent capital and compliance requirements.

Expensive Challenges

While the current regulatory climate is more accommodating, approval is far from guaranteed, making the pursuit of a bank charter both an opportunity and a challenge.

Launching a new bank is an expensive and highly regulated process, requiring between $20 million and $50 million in initial capital.

Prospective applicants must also navigate tough anti-money laundering (AML) regulations and comply with the Bank Secrecy Act .

Historically, approvals have been slow-moving, often taking years to secure. In some cases, applicants withdrew their requests after prolonged delays or regulatory hurdles.

The pace of new bank charters has remained sluggish since the 2008 financial crisis, with U.S. regulators approving just four new charters in 2023, according to S&P Global.

Now, with the Trump administration taking a more business-friendly approach, experts anticipate a faster and more streamlined approval process—one that could encourage a new wave of applications.

Chokepoint 2.0 Reversal Boosts Bank Charter Interest

The renewed push for bank charters follows the rollback of Operation Chokepoint 2.0, a policy that previously restricted crypto firms’ access to banking services.

Under the Trump administration’s deregulatory approach, the regulatory landscape has shifted in favor of fintech and crypto firms looking to expand operations, reduce costs, and solidify their standing within the financial sector.

A key factor in this shift is the departure of Michael Barr, the Federal Reserve’s former vice chair and a primary backer of Chokepoint 2.0.

His replacement, Michelle Bowman, is seen as more supportive of fintech and crypto innovations, further fueling optimism in the sector.

OCC Clarifies Crypto’s Place in the Banking System

The banking sector’s stance on cryptocurrency continues to evolve.

Earlier this month, the Office of the Comptroller of the Currency (OCC) reinforced its stance on cryptocurrency within the federal banking system, reaffirming that certain crypto activities are permissible for national banks and federal savings associations.

The OCC confirmed that banks can engage in crypto-asset custody, select stablecoin activities, and participate in independent node verification networks like distributed ledgers.

Additionally, the agency removed the previous requirement for OCC-supervised institutions to obtain special supervisory nonobjection before engaging in these activities.

“The OCC expects banks to have the same strong risk management controls in place to support novel bank activities as they do for traditional ones,” said Acting Comptroller of the Currency Rodney E. Hood. “Today’s action will reduce the burden on banks to engage in crypto-related activities and ensure that these activities are treated consistently by the OCC, regardless of the underlying technology.”

The OCC also withdrew its participation in previous joint statements concerning crypto-asset risks and liquidity risks, signaling a more open approach toward integrating digital assets into the banking sector.