Crypto firms pursue $20M bank charters under Trump

Cryptocurrency and fintech companies are increasingly seeking bank charters under the Trump administration, which is perceived as more industry-friendly.

This trend is driven by the administration's openness to innovation in the finance sector, particularly in cryptocurrencies.

According to Reuters, discussions about pursuing bank charters have surged, with several industry executives expressing optimism about the potential for approval under the current regulatory environment.

The pursuit of bank charters is motivated by the desire to expand business operations, reduce borrowing costs, and enhance legitimacy.

Securing a charter allows firms to accept deposits, which can significantly lower their cost of capital.

However, the process is costly, with startup costs ranging from $20 million to $50 million, and involves strict regulatory oversight.

Historically, bank charter approvals have been rare, with only about five new charters approved annually between 2010 and 2023, compared to 144 per year from 2000 to 2007.

Despite these challenges, some crypto companies have successfully obtained charters, such as Kraken and Anchorage Digital Bank.

The Trump administration has signaled a pro-crypto stance, creating a crypto working group and hosting a White House crypto summit, which has encouraged firms to explore banking licenses.

However, firms remain cautiously optimistic, awaiting clearer regulatory signals before fully committing to the process.

As noted by industry experts, obtaining a bank charter can provide strategic benefits, including improved access to capital and enhanced credibility with customers.

Despite the regulatory hurdles, the potential benefits are driving a significant uptick in interest among fintech and crypto firms.

"We have seen a lot more interest. We are working on several applications now," stated Alexandra Steinberg Barrage, a partner at Troutman Pepper Locke, highlighting the growing momentum in the sector.