Fintech companies, including cryptocurrency companies, see a unique opportunity under the Trump administration to obtain a banking charter and thus strengthen their legitimacy and reduce their financing costs. While the granting of new banking charters has dropped since the 2008 financial crisis, new policies could facilitate these steps and pave the way for increased competition in the American banking sector.
Why do American cryptos companies want a banking charter?
Traditionally, companies operating in the cryptocurrency sector worked outside the conventional banking frameworkoften due to the reluctance of regulators to grant them institutional recognition.
Obtain a banking charter (or Bank Charter – an official license granted by a banking regulator in the United States, allowing a company to operate legally as a bank) has several advantages for these companies.
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First of all, It reduces financing costsbecause a bank can attract deposits, a source of funding much less expensive than the loan on the markets. Then, it strengthens the credibility of the company to the general public and investors. It also makes it possible to extend the range of financial services offered, ranging from payments to credits.
Since his return to power, Donald Trump clearly displayed a more favorable policy for financial innovationsespecially in the cryptocurrency sector. Several measures have already been set up to encourage their development. These strong signals suggest that regulators will be more inclined to grant bank charters to companies in the sector.
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Candidates for the banking charter
Several Cryptos companies have already expressed their interest in obtaining a banking charter in the United States.
Despite this more lenient political environment, Obtaining a banking charter remains a major challenge for Cryptos companies. They must face strict requirements, in particular with regard to compliance with the anti-money laundering laws and compliance with the Bank Secrecy Act.
In addition, the capital required to start a bank are high, oscillating between $ 20 and 50 million. The supervision of financial regulators also represents a major issue. Some crypto world purists are also concerned about this trend, believing that integration into the traditional banking system goes against the initial vision of decentralization.
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Although the number of new banking charters remains low, With only 5 grants per year on average between 2010 and 2023Trump administration could speed up the process. If this trend is confirmed, it could mark a key step in convergence between traditional finance and cryptocurrencies, at the same time redrawing the banking landscape in the United States.
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Source : UNC
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Investments in cryptocurrencies are risky. There is no guaranteed high yield, a product with high performance potential implies a high risk. This risk taking must be in line with your project, your investment horizon and your ability to lose part of this savings. Do not invest if you are not ready to lose all or part of your capital
Maxime discovered the world of finance and very young investment before launching from the age of 18 years. His passion for financial assets and new opportunities offers him a good vision of the current economy as well as emerging trends.
Maxime Montlet
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