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Financial technology and crypto companies are increasingly seeking state or national bank charters, viewing the Trump administration as more favorable to their expansion plans.
According to a Reuters report, the prospect of securing licenses that were previously slow to be approved is drawing significant interest.
“We’ve seen a lot more interest,” said Alexandra Steinberg Barrage, a partner at law firm Troutman Pepper Locke. “Our clients are cautiously optimistic, waiting for things to settle as the administration appoints new heads of banking agencies.” Preparations for bank charter applications have accelerated, though it remains unclear how many companies will proceed.
Becoming a bank comes with additional regulatory scrutiny, but it can lower operational costs and boost legitimacy in the eyes of customers. A bank charter also allows firms to tap into deposits, which can help reduce borrowing costs, said Carleton Goss, a partner at Hunton Andrews Kurth, who is assisting with three applications.
The push for bank charters follows a decline in approvals since the financial crisis, with just four new bank charters granted in 2023. Before the crisis, regulators approved an average of 144 applications per year from 2000 to 2007. Industry sources expect more charter applications now, particularly with Trump’s deregulatory stance and a focus on fostering innovation and growth in the financial sector.
The Federal Deposit Insurance Corporation (FDIC) and Federal Reserve pushed to encourage more companies to pursue bank charters, citing the need for competition and more entrants in the banking sector. However, industry experts note that the process remains rigorous, with firms typically needing between $20 million and $50 million to start a new bank. The challenges of complying with anti-money laundering laws and other regulations remain major hurdles.
On The crypto front, a legal battle between the industry and the FDIC led to the release of confidential documents revealing the U.S. banking regulator’s active role in halting crypto banking services.
According to Coinbase, the documents, which were made public following a court victory, show that the FDIC was instructing banks to pause or prevent cryptocurrency-related activities throughout 2022. The exchange, which hired History Associates Inc. to fight for access to these documents, claims the communications expose a coordinated effort by the FDIC to restrict crypto businesses’ access to banking services.
The FDIC letters, some of which are heavily redacted, were shared by Coinbase in January. They show how the regulator halted or delayed crypto services, demanding further clarification on compliance before banks could offer digital asset products. One letter stated, “We respectfully ask that you pause all crypto asset-related activity,” adding that the FDIC would notify banks at a later date regarding new expectations for engaging in crypto operations.
Paul Grewal, Coinbase’s Chief Legal Officer, argued that the letters serve as undeniable proof that the crypto industry faced a deliberate and systematic exclusion from banking services. He claims that the FDIC’s actions went beyond mere speculation or conspiracy theories. “This was no conspiracy. The FDIC executed a clear plan to deny banking services to a fully legal industry,” Grewal said. “That should concern everyone.”
