FinTechs and the Pursuit of Bank Charters: A New era for US Banking

The traditional image of a U.S. bank – a brick-and-mortar institution built on decades of established practices – is undergoing a significant transformation. Increasingly, FinTech and cryptocurrency firms are seeking national bank charters, signaling a fundamental shift in the intersection of financial innovation and regulation. This move, while unconventional, reflects a growing confidence in the stability and advantages provided by the U.S. banking system.

The Rising Interest in Banking Charters

historically, banking charters were the domain of established financial institutions. Today, that boundary is dissolving. FinTech companies and those operating in the cryptocurrency space, including payments giants and stablecoin issuers, are actively pursuing national bank charters ,and special purpose designations. In 2025, a surge in activity saw 20 filings for de novo charters, bank acquisitions, or conversions, representing an all-time high . This trend is expected to continue, representing a major moment for the financial landscape.

Rodney E. Hood, former acting comptroller of the currency, explains this shift: “They want to provide 21st century solutions to their clients and customers,” . He further emphasizes that companies recognize the “strength and vitality that comes from a national bank charter.” Seeking a charter isn’t a sign of weakness in the existing system; rather, it’s a testament to its inherent strengths and the benefits it offers.

The Importance of Enduring Principles

A core tenet of this shift lies in the need to anchor innovation to the enduring principles of safe banking. regulatory philosophy, as articulated by Hood, prioritizes safety and soundness, strong governance, operational resilience, and financial inclusion.The challenge is to reconcile rapid technological advancements with long-established statutes.

“Technology was moving far faster than many of the existing statutes,” Hood noted, emphasizing the regulator’s crucial role in anchoring the financial system to these foundational principles. He rejected the notion that innovation inherently reduces risk, stating, “innovation doesn’t at all eliminate risk; it repackages it.” The critical question is whether an activity is understandable, governable, and resolvable under stress.

A bank charter, according to Hood, is a “public trust,” not simply a credential. It carries obligations, including capital discipline, rigorous compliance, and continuous supervision. However, responsible experimentation isn’t discouraged, provided it meets appropriate banking-grade standards. The goal is the “equivalency of outcomes” – maintaining safety and soundness irrespective of the novelty of the activity.

Regulatory Considerations and Systemic Safety

The increasing pace of FinTech and cryptocurrency activity has highlighted concerns about regulatory fragmentation. State-level initiatives, such as Wyoming’s special-purpose depository institutions charter, represent choice pathways for digital asset firms. While these experiments can be valuable, Hood warns of potential destabilization if left uncoordinated.

“We need cooperative federalism, not competitive federalism,” he argued. A fragmented landscape with 50 different rulebooks and a race to the bottom undermines trust in the entire system. A charter, he believes, should be granted only to applicants who can “operate like a bank, not just grow like a technological platform.” Harmonized standards for capital, liquidity, cybersecurity, and anti-money laundering compliance are vital.

Hood also suggests that existing regulatory guardrails can often address cyber and crypto risks with appropriate recalibration, rather than wholesale reinvention. Creating a separate rulebook for cryptocurrencies could introduce further ambiguity. He maintains confidence in the enduring resilience of the U.S. banking supervision system,which has historically evolved incrementally.

A Coordinated Federal Effort

Multiple federal agencies – including the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) – are actively working to align on permissible activities and supervisory expectations. Guidance from the Treasury Department and the National Economic Council further suggests a coordinated federal effort.

Ultimately, as Hood concludes, “The future of banking is not going to be defined by technology alone, but by whether we compare innovation with integrity, speed with supervision, and progress with public trust.”