Financial technology and crypto companies are applying for state or national banking with the aim of expanding their business under the more crypto-friendly Trump administration as industry leaders report a remarkable uptick in charter discussions and applications, Reuters reports.
“We’ve seen much more interest. We’re working on more applications now,” Alexandra Steinberg Barrage, a partner at the law firm Troutman Pepper Locke, told Reuters. However, companies are “cautiously optimistic” as the management agency’s management changes.
Becoming a bank brings stricter regulatory supervision, but it can reduce borrowing costs and improve legitimacy. Bank Charter allows companies to lower their capital costs by accepting deposits, yet it is an important point to get an important point in the crypto community.
Different cryptocurrency companies have over time resisted to become banks over the regulatory supervision associated with the relocation, instead chose to follow the ETOS of the industry to further decentralize and improve access to financial services to unbeated or underbanking persons.
Cryptocurrency -Company, including Paxos, Anchorage and Protego, has been federally regulated crypto banks’ after securing a federal confidence charter through the US office of Comptroller of the Controller of the Controller (OCC). Kraking and Avanti have secured Special Purpose Depository Institutional charts in Wyoming, making them state-regulated crypto banks.
Historically, new bank charter has been rare. Between 2010 and 2023, regulators approved on average only five annually compared to 144 per year. Years from 2000 to 2007, according to S&P Global.
Applications subdued due to low interest rates, profitability problems and regulatory obstacles. Federal Deposit Insurance Corporation (FDIC) and Federal Reserve -Employees have signaled support for streamlining the process. However, setting up a new bank remains expensive with costs ranging from $ 20 million to $ 50 million, according to the report.
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