You may have noticed a surprising number of crypto and fintech companies, and even retailers like WalMart, are now talking about applying for charters; and it's not just for show. There’s a real strategic play underway. According to a recent Wall Street Journal article, “Why every company suddenly wants to be a bank,” major players like Ripple, Coinbase, Circle, Wise, and others are actively pursuing national trust charters. Of course, they want all the perks, but none of the responsibilities that come with them.
Unlike full commercial bank charters, these trust charters allow firms to provide fiduciary services and custody of assets, but don’t necessarily let them take deposits or lend money. For WalMart, for instance, a bank charter would enable the retail giant to capture revenue from services like credit cards and loans, deepen customer loyalty through branded financial products, and compete directly with traditional banks, particularly in offering services to the underbanked and unbanked.
Why this Trend Worries Bankers
While the benefit to these entities is significant, so is the risk to community bankers, which is why many are sounding the alarm. According to the Independent Community Bankers of America (ICBA), these national trust charters could give non-bank companies access to banking-like capabilities; and critically, without subjecting them to the same regulatory burdens—on both internal resources and budgets— with which banks must contend.
As discussed in Independent Banker’s, “Why National Trust Bank Charters Spark a Growing Policy Fight, there’s concern because “for decades, the Office of the Comptroller of the Currency (OCC) issued national trust bank charters for a narrow purpose: letting institutions provide fiduciary and custodial services without taking deposits or making loans and importantly, without being subject to capital, liquidity, or supervisory standards. This kept community banks and trust banks in separate lanes with little overlap. Critics argue that, and justifiably so, issuing charters will tilt the playing field. With looser requirements (for some charters), these companies might gain banking “privileges” without being fully regulated like a traditional bank.
Why it's happening
Legitimacy
One of the biggest motivations for fintech and crypto companies is regulatory legitimacy. By securing a national trust charter, firms can operate under federal oversight, which signals to customers, investors, and the broader financial community that they’re serious about operating within the regulated banking system. For crypto firms in particular, this helps build trust; especially when so much of their business involves holding or managing not-quite-yet-recognized-as-legitimate digital assets.
Greater access to the payments Infrastructure
Having a charter gives firms direct access to critical banking infrastructure, services such as FedWire, ACH, and other payment systems. Why is this a big deal? Because without a charter, they often rely on traditional banks for managing government-issued currency. By becoming their own regulated entity, they can control more of that flow, provide more efficient transaction services, and reduce the costs associated with relying on third-party banking partners.
Stablecoins and asset custody
Many of these firms issue stablecoins, which we talked about in our October 22 blog, and want to oversee how those reserves are held and managed. With a trust charter, a company like Circle, for instance, could more directly manage its USDC reserves, (there is currently over $75 billion in digital currency in circulation) and provide services to institutional customers under regulated conditions.
Reduced capital costs
By gaining banking status, these firms can tap into customer deposits, which is a far cheaper source of funding than relying solely on venture capital or other high-cost financing. Deposits improve liquidity and provide greater opportunities, and flexibility, to scale other financial services.
Strategic growth goals
Some companies are eyeing not just crypto clients but a broader financial services play. Ripple, for example, has applied for a full national bank charter, not just a trust charter, signaling ambitions beyond crypto custody. This puts them in position to offer more traditional banking services, potentially bridging the gap between fintech innovation and legacy finance. And why now? With the GENIUS Act and an OCC leadership that appears to be more open to innovation in charters, these “wanna be” banking services providers see this as an opportune time to push for change.
What does the future of finance hold?
While the future is always uncertain, here are just a few of the developments we may see down the road:
- Blurring boundaries: The lines between crypto firms, fintechs, and traditional banks are blurring. As more tech companies become “banks,” financial services might look very different in the next decade.
- New competitors: Smaller, community-focused banks may face new competition from these tech-native firms; not just in payments or custody, but potentially in customer banking services if charters expand in scope.
- Regulatory and policy implications: Regulators will need to wrestle with how to balance innovation and consumer protection. The flood of trust charter applications has already sparked policy debate. As stated in an ICBA August article, “an ill-conceived OCC policy shift now threatens to enable these nonbanks to receive the traditional trust charter while engaging in activities the charter was never intended to permit.”
- Opportunities to Innovate: There are opportunities here for traditional banks. Those that embrace digital asset services, fintech partnerships, and stablecoin-linked products could find new pathways to growth and relevance.
There may not be a crystal ball certainty here, but one thing is for certain. As the financial services industry evolves, and it will continue to do so, the shift of non-bank players into more traditional banking roles will reshape how we think about banking. What was once a distinct divide between “crypto company” and “bank” may be narrowing. And that will mean big changes ahead for both the incumbents and newcomers.
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*Image courtesy of the Wall Street Journal