Cryptocurrency and fintech firms are increasingly pursuing bank charters to expand their operations amid a more business-friendly regulatory environment under the current administration, as reported by industry leaders.
This trend arises from a perception that the new leadership is more supportive of industry initiatives, allowing businesses to navigate a licensing process that has historically faced delays under prior administrations.
Although the interest in obtaining bank charters is growing, it’s unclear how many firms will proceed with applications. Establishing a bank can require substantial investment—often tens of millions of dollars—but this endeavor can yield significant advantages, such as enhanced trust among potential customers.
In historical context, 144 bank charter applications were approved annually from 2000 to 2007, but this figure plummeted to an average of just five approvals per year from 2010 to 2023. This decline correlates with the 2008 financial crisis, which brought increased regulatory scrutiny on banking institutions.
The current administration has demonstrated a willingness to embrace innovation within the financial sector, particularly in the realm of cryptocurrency. Since taking office, efforts have included forming a crypto working group, issuing an executive order to establish a national strategic Bitcoin reserve, and convening the first presidential crypto summit.
### Cryptocurrency Firms Seeking Bank Charters
While it’s not typical for cryptocurrency companies to seek bank charters in the United States, there are notable successes from the 2020s. For instance, the crypto exchange Kraken received approval for a bank charter in Wyoming in 2020, Anchorage Digital Bank was granted its charter in January 2021, and the crypto lender Nexo acquired a share in a holding company with a federally-chartered bank in 2022.
Companies face numerous obstacles when applying for bank charters, such as ensuring compliance with anti-money laundering regulations and the Bank Secrecy Act. This added regulatory framework could conflict with the decentralized ethos that many in the crypto community value.
Nonetheless, obtaining a bank charter offers a significant financial advantage: companies can reduce their capital costs by accepting deposits.