Crypto and Fintech companies are reportedly applying for bank charters under the Trump administration, paving the way for greater financial legitimacy.
A recent Reuters report suggests that crypto companies could apply for a bank charter to expand their business and reduce borrowing costs. At least half a dozen industry executives have confirmed that crypto companies will “see opportunity” under the Trump administration to gain credibility among their clients by applying for banking licenses.
A banking charter is a government-issued legal license that enables businesses to operate and provide banking services. Defines the structure of the bank, permitted activities, and regulations to follow to protect customers and maintain financial stability.
“We’re more interested. We’re currently working on some applications,” said Alexandra Steinberg Barage, a partner at the law firm at Troutman Pepper Rock.
Barage said the company’s clients are “cautiously optimistic” under the new administration, but are waiting for it to become clearer once the Trump administration begins to appoint heads of financial institutions.
During the Biden administration, it was difficult to secure a charter for the banks, as regulators were reluctant to slowly approve regulators to approve them, especially for crypto companies. The previous administration maintained a more negative attitude towards code compared to the current administration.
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Two other sources currently working on potential applications told Reuters that discussions and preparations for the banking charter have increased significantly since Donald Trump took office. However, they are waiting to see how many companies follow the application.
The Bank Charter introduces the system to more stringent regulatory oversight, but also has great advantages.
Carlton Goss, a partner at Hunton Andrew Scars, working on three applications, said the banking charter will help businesses reduce borrowing costs by withdrawing deposits. It also increases corporate legitimacy and creates new business and market opportunities.
“It makes sense that they’re ahead of the curve, and applying for the charter will allow them to gain more reliability and capital at a lower cost,” Goss said.
Last February, Wall Street banks reportedly expressed interest in the opportunity to hold initial public offerings through crypto companies. The spark of interest came after major crypto exchanges like Gemini and Bull expressed interest in publishing. Kraken and the Stablecoin Issuer Circle also looked into the public list.
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