Circle could face an uphill climb to get a banking charter
By Brendan Pedersen
Circle’s announcement that it will seek commercial banking authority is the latest sign that nonbanks aren’t waiting around for regulators to tailor a charter just for them.
Fintech companies had hoped for years that the Office of the Comptroller of the Currency would deliver a special charter with some of the benefits of a bank but not all of the regulatory hurdles, such as needing Federal Deposit Insurance Corp. approval….“Certainly, there will be no special-purpose charters anytime soon,” said Karen Petrou, managing partner of Federal Financial Analytics. “The acting comptroller [Michael Hsu] has made that very clear.” Other analysts said it was possible that crypto companies interested in bank charters might be in for a rude awakening when they realize the full heft and impact that national bank oversight could have on their enterprise. “It’s my own view — and I suspect, over time, the OCC’s — that if an entity is able to meet the managerial capabilities, financial strength and capital requirements, and operational risk management requirements demanded of a bank with crypto activities,” said Petrou, “there’s no reason why they shouldn’t” be granted a bank charter. But Petrou added that she doubts “that any crypto trader fully understands the scope of the obligations it would entail to become a full-service national or state-chartered bank.” “I think there’s no doubt that the U.S would take the approach the Basel Committee has proposed for any bank engaged in crypto,” Petrou said, which could translate to significantly steeper capital requirements for digital assets.