Figure Technologies Inc., a blockchain firm started by SoFi Technologies Inc. co-founder Mike Cagney, is the most recent company to withdraw its application for a bank charter, a move made after years of waiting for an answer from US financial regulators. Figure isn’t alone: financial-technology firms Oportun Inc., Brex Inc. and Monzo Bank Ltd. and crypto company BitPay Inc. have all pulled their US banking-charter applications, seeing how arduous the path to approval has become.
“While I’m answering questions every week from people who want new charters, very few people, if any, will get those charters,” said Matthew Bisanz, a partner with law firm Mayer Brown LLP focused on financial regulation. But that, too, is proving challenging — not as difficult as de novo approval, but not easy either. On a scale of one to 10, a fintech securing a new bank charter is likely an eight, while acquiring an existing one is closer to a five or a six, Bisanz said.Figure, for one, isn’t ruling out becoming a bank in the future — including, potentially, through acquisition — though it has no current plan to do so, according to Chief Operating Officer TJ Milani.
The banking environment today is a far cry from when Trump was president. Two fintechs — Square, now known as Block Inc., and Nelnet Inc. — were granted industrial-loan company charters in 2020, and one crypto firm, Anchorage Digital, obtained a national bank charter a week before Trump left office. “It seems interminable,” he said. When Jack Dorsey’s Square was applying to become a bank, it fielded more than 600 follow-up questions from the Federal Deposit Insurance Corp., which is involved in the approval process and often the source of even more scrutiny than the OCC, he said. “It kept dealing with that type of inflow from the FDIC over three years.”It’s even more challenging for a crypto firm to land a bank charter — or for existing banks to get involved in crypto.