FinTechs Are Shopping for Very Different Charters

FinTech companies are exploring a variety of federal charter options, leading to institutions with diverse regulatory powers and roles within their businesses. FinTech firms such as Revolut, Circle, Block, Upstart, and Chime are pursuing different types of national bank charters.

Revolut aims to obtain a national bank charter that would allow it to offer insured deposits, credit cards, and loans, along with access to stablecoins and cryptocurrencies. However, it must still secure approval from the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, and obtain final approval from the OCC before launching the proposed bank.

Circle has received final approval to establish First National Digital Currency Bank, N.A., which will provide fiduciary digital-asset custody services for Circle and its affiliates. The bank may eventually provide custody directly to institutional customers and manage the USDC Reserve.

Block is in the early stages of pursuing a national trust bank charter, Builders Bank & Trust, N.A. This institution would provide custody and related fiduciary services for Block, including services involving bitcoin and stablecoins. However, it would not accept deposits or make loans, making it an uninsured national trust bank.

Upstart is pursuing a national bank charter centered on deposits and consumer lending. The proposed branchless bank would accept FDIC-insured deposits and originate consumer loans nationwide. Its existing funding relationships with banks, credit unions, and institutional credit funds would complement its proposed bank.

Chime is opting to acquire Stride Bank, a nationally chartered institution that has partnered with Chime for over seven years. If the acquisition is completed, Stride would become Chime Bank, N.A., a wholly-owned subsidiary of Chime. Chime believes that owning Stride could eliminate partner-bank fees, reduce funding costs, and allow for faster development of regulated products.