Under the administration of U.S. President Donald Trump, several fintech and cryptocurrency companies are actively exploring the possibility of becoming state-chartered banks.

This shift is driven by a more favourable regulatory environment and the potential for reduced operational costs and enhanced legitimacy.

A New Era of Opportunity

Industry insiders report a significant increase in applications and discussions for bank charters.State-chartered bank status offers fintech and crypto firms several advantages, including the ability to accept deposits, which can lower borrowing costs.

Carleton Goss, a partner at Hunton Andrews Kurth, emphasised that obtaining a charter allows companies to reduce their cost of capital and expand market opportunities. He is currently handling three such applications.

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The Appeal of Bank Charters

Becoming a bank subjects companies to increased regulatory scrutiny, but it also enhances their credibility and offers strategic business benefits.

With a bank licence, firms can access cheaper funding by accepting customer deposits, reducing dependence on external capital markets.

This is particularly attractive for crypto companies aiming to solidify their market position while improving customer trust.

Some companies, such as Paxos, Anchorage, and Protego, have already secured federal trust charters through the U.S. Office of the Comptroller of the Currency (OCC), positioning themselves as federally regulated crypto banks.

Additionally, Kraken and Avanti have obtained Special Purpose Depository Institution (SPDI) charters in Wyoming, allowing them to operate as state-regulated crypto banks.

Challenges and Regulatory Landscape

Despite the apparent advantages, the path to becoming a bank remains complex and costly. Establishing a new bank can require between $20 million and $50 million, creating a high barrier to entry.

Furthermore, historical data reveals that new bank charters are rare. Between 2010 and 2023, regulators approved an average of only five new banks annually, far fewer than the 144-per-year average from 2000 to 2007.

The Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve have expressed a willingness to streamline the chartering process, potentially reducing these barriers.

However, regulatory oversight remains a key point of contention, particularly in the crypto community, where firms traditionally prioritise decentralisation and independence from traditional financial systems.

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Looking Ahead

As the regulatory environment continues to evolve, fintech and crypto firms remain positioned to leverage bank charters to drive innovation and expand their services. Industry experts predict that more companies will pursue charters if regulatory processes become more transparent and accessible.

Ultimately, this growing trend could reshape the financial landscape, encouraging competition while offering consumers broader access to financial services.

For fintech and crypto firms, the decision to seek bank status represents a strategic move to strengthen their market position, improve cost efficiency, and navigate the evolving regulatory framework.