The Rise of Fintech and Crypto Banks: How They're Changing the Financial Landscape

EddieJayonCrypto

 18 Mar 25

tl;dr

Fintech and crypto firms are seeking state and national banking licenses under the Trump administration, aiming to gain regulatory approval that has been slow to materialize. The administration's stance has forced regulators to transition from caution toward crypto, leading to increased interest in ...

Fintech and crypto firms are actively pursuing state and national banking licenses under President Donald Trump’s administration to gain regulatory approval that was previously slow to materialize. Industry executives indicate that firms seeking credibility and market expansion see a favorable landscape under the administration, which has forced regulators to transition from their cautious stance toward crypto. New banking entrants increase industry competition and cater to niche market segments. Analysts and industry participants indicate that financial institutions launched by fintech and crypto firms could address underserved customer bases.

Moreover, legal professionals working on banking charter applications confirm a rising interest. Multiple applications are in progress, though firms remain cautiously optimistic as regulatory leadership settles. Becoming a licensed bank presents additional regulatory scrutiny but offers strategic benefits. A banking license lowers borrowing costs, improves capital access, and enhances legitimacy in customers' eyes.

Regulatory leaders installed by Trump’s administration have highlighted financial technology innovation. Federal Deposit Insurance Corporation (FDIC) acting chair Travis Hill recently stated that the agency aims to encourage more bank charter applications to maintain a steady pipeline of new entrants. The FDIC will also revise its guidelines to allow banks to interact with crypto-related activities, suggesting an opening channel.

Federal Reserve Chairman Jerome Powell contributed to the improving regulatory landscape by saying that the central bank regulator has no intention of preventing banks from serving crypto to perfectly legal customers. The number of new bank charters approved in the US plummeted after the 2008 financial crisis, with just four approvals recorded in 2023, according to S&P Global.

Online financial platforms recognize that increasing regulatory scrutiny necessitates a proactive approach. It makes sense for these platforms to get ahead of the curve, adding that securing a bank charter enhances credibility and reduces operational costs.