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Overview
Interest in bank charters for fintechs, digital asset service providers, and other firms has been reinvigorated by the return of Trump appointees to the federal banking regulators. In the first Trump administration, several lucky applicants secured novel (a.k.a. “special purpose”) bank charters that allowed them to grow their fintech businesses on a national basis, although even more were left with in-process applications that ultimately did not succeed. During the Biden administration, only a small number of financial innovators obtained federal approval for novel arrangements involving national trust banks and uninsured state banks. Faced with these impediments, some firms pivoted to achieve their goals through the acquisition or establishment of full service banks that focus on specific innovative products and services.
Today, there is an increasing number of novel bank charter options to explore. These include uninsured state, territorial, and tribal banks, trust companies, and federal branches of foreign banks. There also are idiosyncratic options, such as Georgia’s merchant acquired limited purpose bank and Wyoming’s special purpose depository institution. These options can create new use-cases for consumer payments, commercial deposits, stablecoins, and currency distribution, and potentially receive access to a Federal Reserve Master Account and payment services. This panel will discuss developments in charter choice and the prospect of tech and fintech firms entering into parts of the business of banking through novel charter options.
Key areas to be discussed include:
- What is a bank? (7 minutes)
- Why are fintechs interested in bank charters? (8 minutes)
- How are novel charters different? (8 minutes)
- Number of regulators?
- Holding company regulation?
- FDIC insurance?
- Payment Access?
- Controversy?
- State trust companies (8 minutes)
- Industrial loan companies (5 minutes)
- National trust banks (7 minutes)
- Uninsured banks, including federal branches (10 minutes)
- When will we see more novel charters issued? (7 minutes)
Who Should Attend: In-house counsel, outside attorneys, compliance, banking, finance, and other allied professionals interested in learning about current developments in novel bank charters.
Program Level: Update
Prerequisites: None
Advanced Preparation: None
Faculty:
Matthew Bisanz
Mayer Brown LLP
Adam J. Cohen
Skadden, Arps, Slate, Meagher & Flom LLP
Jeffrey L. Hare
DLA Piper LLP