The Race for Bank Charters in Crypto

Why Crypto Companies Want Bank Charters

Something remarkable is happening in crypto regulation. A growing list of major crypto and fintech companies are applying for banking charters — and the pace is accelerating. Circle has applied for a US trust banking license, with plans to operate under the name First National Digital Currency Bank. Ripple has applied for a national banking license with the OCC. Anchorage Digital already holds a National Trust Bank Charter, making it one of the first federally chartered digital asset banks in the country.

The movement isn't limited to crypto-native firms. Peter Thiel and Palmer Luckey are backing a new bank called Erebor, designed specifically to serve crypto startups and digital asset businesses. Bridge has received conditional approval for a National Trust charter. And Payoneer has applied for a similar charter under the name PEO Digital Bank. Each of these companies sees a banking charter as a strategic necessity, not just a regulatory checkbox.

Why the sudden rush? The answer has a lot to do with the GENIUS Act — a federal stablecoin bill that is reshaping how companies think about their regulatory posture. The companies that position themselves with the right charter structure today may have a significant head start when the bill becomes law.

“Most of these companies are already licensed. Why does Bridge actually need the trust charter? They already have MTLs in almost all 50 states. The reason is that you get federal preemption — you have one regulator, not 50. I think there's an expectation that it's going to be the best structure in which to become a GENIUS Act stable coin issuer, because you can get the charter today from the regulator that's going to give you the GENIUS Act license.”

— Davis Hart, Founder & CEO of Omnia

In other words, a charter isn't just about what you can do today. It's about where the regulatory framework is heading — and making sure you're standing in the right place when it arrives.

What a Charter Actually Gives You

To understand why the charter race matters, you need to understand what a banking charter — specifically a national trust charter from the OCC — actually provides. The advantages are substantial and go well beyond symbolic credibility.

The most significant benefit is federal preemption. Today, many crypto companies operate under a patchwork of state-by-state money transmitter licenses (MTLs). That means dealing with up to 50 different regulators, each with different requirements, examination schedules, and compliance expectations. A federal charter replaces that fragmentation with a single regulator. You answer to the OCC, and the OCC alone. For companies operating at scale, this is transformational.

Beyond preemption, a charter gives companies the ability to manage reserves directly rather than relying on third-party banks to hold customer funds. It enables custody of both fiat and digital assets under one roof. It provides credibility with institutional counterparts — banks, asset managers, and payment networks that need to know their partners are regulated to a high standard. And it offers future-proofing for GENIUS Act compliance, positioning the company to obtain a federal stablecoin license once the legislation is finalized.

“If they want to work with the banks and the big players, and that's where the capital is, then having a banking charter makes them more legitimate. So why would they not do it?”

— Elise Soucie Watts, Executive Director of Global Digital Finance

For companies like Circle, which is building a global payments network and issuing one of the largest stablecoins in the world, the charter isn't a nice-to-have. It's a prerequisite for the kind of institutional trust required to compete with legacy payment infrastructure.

The GENIUS Act: A Federal Path Forward

The GENIUS Act is the catalyst behind much of this activity. For years, stablecoin regulation in the United States has been a patchwork of state-level frameworks. New York's BitLicense, various state money transmitter regimes, and a handful of state trust charters have provided some structure — but there has been no comprehensive federal framework for stablecoin supervision.

The GENIUS Act changes that. It creates a federal regulatory path for stablecoin issuers, establishing clear requirements for reserves, transparency, and supervision. Companies above $10 billion in stablecoin issuance may need to take the federal route, submitting to oversight by the OCC or the Federal Reserve rather than relying solely on state-level licenses.

This is a watershed moment for the industry. For the first time, there is a potential federal path to supervise stablecoin issuance — one that provides clarity, consistency, and international credibility.

“People see the GENIUS Act coming. And for the first time, there is a potential federal path to supervise stablecoin issuance, where the past few years, the only option has really been state paths.”

— Cuy Sheffield, Head of Crypto at Visa

The implications are significant. Companies that secure a federal charter now will be positioned to apply for GENIUS Act licenses as soon as the framework is implemented. They'll have the regulatory relationships, compliance infrastructure, and institutional credibility already in place. Those that wait may find themselves playing catch-up in a market that rewards first movers.

State vs. Federal: The Charter Debate

Not everyone is racing for a federal charter. The state vs. federal debate is one of the most active areas of contention in stablecoin regulation, and it reflects deeper questions about how financial innovation should be governed in a federalist system.

On the state side, there are established paths. Money transmitter licenses provide a baseline level of authorization. New York's Department of Financial Services (NYDFS) offers trust charters that have become the gold standard for state-level crypto regulation. Several states are actively competing to attract digital asset companies, seeing them as sources of tax revenue, talent, and economic growth.

On the federal side, OCC national trust charters offer the advantages of preemption and institutional credibility. But they also come with higher capital requirements, more rigorous examination schedules, and the full weight of federal banking regulation.

The real concern, however, is about what happens at the international level. Stablecoins are inherently cross-border instruments. If a stablecoin is only supervised at the state level, does that state then need to negotiate reciprocity arrangements with foreign regulators? The GENIUS Act would enable federal-level agreements with jurisdictions like the UAE, the UK, and the EU. A state-level charter may not provide that capability.

“A concern for me, for a state level regulated stablecoin is, does that mean that then that state would have to agree to reciprocity arrangements with, say, the UAE, the UK, the EU? Because basically what GENIUS does is it would enable a federal level agreement. How does that work if you're only state level regulated? That would destroy one of the massive use cases for stablecoins, which is obviously cross border payments.”

— Elise Soucie Watts, Executive Director of Global Digital Finance

This is a critical point. If the value proposition of stablecoins is that they can move money across borders instantly and cheaply, then the regulatory framework needs to support that. A state-level-only approach could fragment the market and undermine one of the core use cases that makes stablecoins compelling in the first place.

The Skeptic's View: Is a Charter Right for Everyone?

While the momentum toward bank charters is undeniable, not everyone in the industry thinks it's the right move for every company. The history of fintech is littered with examples of companies that chased banking licenses only to find that the regulatory burden outweighed the benefits.

“I've done this long enough and invested in fintech companies long enough that I've seen all of the fintech companies try to become banks, and all the banks try to become fintech companies. It's like nature. The banks want bigger multiples, the fintech companies want an interest margin.”

— Rob Hadick, General Partner at Dragonfly

The concern is real. Becoming a bank means accepting a fundamentally different business model. Banks are measured on return on equity (ROE), and the capital requirements of a banking charter can be a significant drag on that metric. Regulatory compliance costs are ongoing and substantial — examinations, reporting requirements, capital adequacy tests, and consumer protection obligations all add up.

For companies that want to be valued like technology companies — with high revenue multiples based on growth and scalability — becoming a regulated bank could actually be counterproductive. Bank stocks trade at lower multiples than tech stocks for a reason. The regulatory burden, capital requirements, and slower growth trajectories of banks make them less attractive to investors who are accustomed to software economics.

The question each company needs to answer is whether the strategic benefits of a charter — federal preemption, reserve management, institutional credibility — outweigh the costs of operating as a regulated financial institution. For Circle, Ripple, and Bridge, the answer appears to be yes. But for smaller companies or those focused purely on technology and distribution, the calculus may be very different.

The Long Tail: What About Smaller Players?

Not every company in the stablecoin ecosystem will get — or even need — a banking charter. The barrier to building financial products is dropping rapidly, and that trend is creating opportunities for a new wave of fintech companies that compete on very different dimensions than their predecessors.

Embedded wallets, custom stablecoins, and blockchain-based payment rails are making it possible for companies to offer financial services without building the infrastructure themselves. A startup today can integrate a stablecoin wallet into its app using off-the-shelf SDKs. It can issue its own branded stablecoin on a public blockchain. It can settle cross-border payments in seconds using USDC or USDT without ever touching a correspondent banking relationship.

“The barrier to entry to creating financial products is getting lower and lower almost by the month. Stablecoins have played a major role in doing that. There's just gonna be more competition than we've ever seen before in fintech and financial services.”

— Cuy Sheffield, Head of Crypto at Visa

This means the next thousand fintech companies won't compete on technology or infrastructure — those are becoming commoditized. Instead, they'll compete on brand and distribution. Which company has the most trusted brand in a specific market? Which company has the best distribution channel to reach small businesses in Southeast Asia, or freelancers in Latin America, or creators in Europe? The technology stack matters less when everyone has access to the same building blocks.

For these companies, a banking charter would be overkill. The regulatory cost and complexity would slow them down without providing proportional benefit. Instead, they'll operate under lighter-touch regulatory frameworks — money transmitter licenses, partnerships with chartered institutions, or compliance-as-a-service platforms that handle the regulatory burden on their behalf.

What This Means for the Industry

The race for bank charters is one of the most consequential trends in the stablecoin ecosystem. Here's what it signals for the industry going forward:

• Chartered institutions will form the backbone of fiat-to-stablecoin infrastructure. Companies like Circle, Anchorage, and Bridge are positioning themselves as the regulated gateways between traditional finance and digital assets. They will be the entities that banks, asset managers, and payment networks trust to hold reserves, settle transactions, and issue compliant stablecoins.
• State vs. federal competition will continue. States will keep competing to attract crypto companies with favorable regulatory frameworks. But the GENIUS Act is tilting the playing field toward federal oversight, especially for large-scale issuers. The tension between state innovation and federal standardization will define the next chapter of crypto regulation.
• Not every company needs a charter. The long tail of fintech will thrive without banking licenses. Embedded finance, stablecoin APIs, and compliance-as-a-service platforms will enable thousands of smaller companies to build financial products without the overhead of being a regulated bank.
• The window is open now, but regulatory environments change. Today's OCC is receptive to digital asset charters. That may not always be the case. Companies that move quickly to secure charters are betting that the current regulatory posture will persist — and that the GENIUS Act will become law. Those are reasonable bets, but they're not certainties.
• Banks and crypto companies are converging from opposite directions. Banks want the growth and multiples of tech companies. Crypto companies want the stability, trust, and access of banks. They're meeting in the middle — and the banking charter is the bridge between those two worlds.

The race for bank charters isn't just about compliance. It's about who gets to define the infrastructure layer for the next era of money. The companies that secure the right regulatory positioning today will have outsized influence over how stablecoins, payments, and digital assets are governed for decades to come.