Crypto firms in the US are reportedly seeking bank charters, encouraged by President Donald Trump’s pro-digital asset regulatory environment.
According to a new report from Reuters, crypto and fintech companies are increasingly interested in reducing their borrowing costs by acquiring bank licenses, something regulators in the past were slow and reluctant to approve under the Biden Administration.
[adinserter block="1"]A bank charter is a license issued by the government that allows the institution asking for it to operate as a bank and engage in activities such as accepting deposits and making loans.
Two anonymous sources familiar with the matter told Reuters that while institutional demand for bank charters has increased, it is unknown how many firms will be given the licenses.
Carleton Goss, a partner at the law firm Hunton Andrews Kurth who is working on some of the applications, said that bank charters would not only allow crypto firms to appear more legitimate to consumers, it would also reduce their borrowing costs.
“Online companies know that they will be coming under greater regulatory scrutiny… It makes sense for them to get ahead of the curve, and in turn, get more credibility and capital at a lower cost by applying for a charter.”
According to a letter sent to Reuters, between 2010 and 2023, regulators approved an average of five new bank charters per year, compared to 144 between the years of 2000 and 2007.
Nathan Stovall, director of the financial institutions research at S&P Global Market Intelligence, said that the Trump Administration’s new lax regulations are sending a positive message to fintech and crypto firms.
“We haven’t seen a flurry of charter applications since the financial crisis period, but we certainly saw more in the first Trump administration.”
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