Trends converging in recent months have the potential to reshape the operating environment for fintechs, digital asset and payments companies, and other nonbank financial firms in the United States, in important ways. These include: persistent and growing consumer demand for new ways to access financial services, especially through digital channels; the continued maturation and integration of fintech business models into traditional banking and payments ecosystems; and congressional efforts to clarify rules of the road for digital assets and stablecoins. But one trend stands out for its potential to effect lasting changes to the sector: the rise of “novel” charter types that allow nonbank firms to expand their products and services, and access many of the privileges associated with a banking charter, without in fact becoming a “true” bank.
At both the federal and state levels, alternative regulatory chartering options are on the rise, no doubt bolstered by the second Trump administration’s pro-innovation (and pro-crypto) posture and leaders of the federal financial regulators emphasizing their openness to novel business models.[1] Although many of these charter types are not new, most have seen new life in 2025. To take one example, no fewer than seven fintech, crypto, and payments companies have applied for a national trust bank charter in recent months. We expect this trend to accelerate in the near term, especially as rules to implement the GENIUS Act are finalized and agencies begin accepting applications for stablecoin issuer licenses.[2]
Below, we provide a survey of novel federal and state charter types, outlining their key features, recent developments, and opportunities and challenges for companies with—or aspiring to—these charters.
Novel Federal Charters
National Trust Banks
- Background: The Office of the Comptroller of the Currency’s (“OCC”) authority to charter national trust banks is well-established in banking law and regulation. By statute, a national trust bank (or “national trust company”) is a national bank whose activities were historically interpreted to be limited to trust and fiduciary services (e.g., custodying assets, providing investment management services), and related activities; it does not generally accept deposits. There are approximately 60 active national trust banks today.
In January 2021, during the final days of President Trump’s first administration, the OCC issued an interpretive letter that significantly expanded the boundaries of permissible trust company activities and paved the way for the increased interest that fintech and payments companies are showing in the charter. Specifically, in Interpretive Letter 1176, then Chief Counsel, Jonathan Gould—who now heads the agency as the Comptroller of the Currency—interpreted the National Bank Act as permitting a national trust bank to perform effectively any activity authorized for a state trust bank, even “activities that are non-fiduciary in nature,” including facilitating payments.
- Recent Activity: Following the publication of Interpretive Letter 1176, the OCC approved (or conditionally approved) several national trust bank charter applications by fintech and digital asset companies (e.g., Anchorage Digital Bank, Protego). In the last few months, moreover, the OCC has received a wave of national trust bank applications from prominent U.S. payments and crypto companies, including Wise, Circle, and Ripple.
- Opportunities: As an OCC-chartered and regulated entity, a national trust bank may operate on a national scale without regard to state licensing regimes and benefits from federal preemption of state laws that could prevent or significantly interfere with its authorized activities. Accordingly, national trust companies operate under a unified legal, regulatory and supervisory framework that is largely outside the reach of state banking, payments and consumer protection authorities.
Further, as national trust companies do not generally take deposits or make loans, they are not “banks” under the Bank Holding Company Act (“BHCA”) and their corporate parent does not become a bank holding company subject to the supervision and regulation of the Board of Governors of the Federal Reserve (“FRB”). A national trust bank also is eligible to apply for an FRB master account, which among other benefits provides direct access to core central banking services (e.g., Fedwire). Master account access is not automatic, however, and each national trust bank must make a separate application to the FRB, which retains ultimate authority and discretion to approve or deny these applications.
- Challenges: National trust banks do not have full banking powers and cannot offer traditional lending and deposit products. Furthermore, the OCC applies stringent prudential requirements on national trust banks—including capital requirements—that some fintechs and early-stage companies may find difficult to satisfy.
FDIC-insured Industrial Loan Companies
- Background: Industrial loan companies (also known as industrial banks) (together, “ILCs”) can be chartered under the law of certain, primarily Western states, and many operate under Utah’s industrial bank statute. Because they must offer insured deposits, ILCs are also supervised by the FDIC. ILCs can provide a wide range of banking services (e.g., accepting insured deposits, making loans, facilitating payments), but cannot offer “demand deposits,” such as the checking and savings accounts most consumers are accustomed to.
ILCs benefit from a statutory exemption from the definition of “bank” under the BHCA, and their parent companies are not required to register as bank holding companies or come under the regulation and supervision of the FRB. This feature has long made the ILC charter attractive to nonbank financial firms, including auto companies, and others seeking banking capabilities without becoming subject to the activity restrictions that follow from bank holding company status. It also leads to the primary criticism of ILCs, however: that they blur the line between banking and commerce and lead to an unfair playing field where, in theory, a retailer (e.g., Walmart, Amazon) could own an ILC and offer bank-like products to its customers, but operate outside the prudential bank regulatory perimeter.
Commercially-owned ILCs have existed for decades, but, in part due to the criticisms noted above, the charter has been effectively unavailable for periods of time. After a long dormant period following the 2007-2008 financial crisis, the FDIC re-opened the door to new ILC approvals during President Trump’s first administration. In 2020, the agency approved two ILC deposit insurance applications—for student lending servicer Nelnet and payments firm Block (formerly Square) and also issued a final rule intended to revise capital and liquidity safeguards for ILCs.
- Recent Activity:
- The FDIC took a more skeptical approach to ILC applications during the Biden administration, particularly where applicants were affiliated with technology or commercial firms rather than traditional financial institutions. Only one application succeeded between 2021 and 2025, for the establishment of an ILC subsidiary of Thrivent Financial for Lutherans.[3] This ILC provides a range of traditional banking services and is supported by a heavily regulated, capital-rich insurance and financial services company, and therefore its application differed in meaningful ways from the more controversial ILC applications, especially those from commercial or technology companies.
- In recent months, signs have been emerging that the door for ILC applications is reopening at the FDIC in the second Trump administration. First, in July 2025, the agency withdrew an August 2024 rule proposal that, if finalized, was interpreted to be disadvantageous for ILC applicants and their parent companies. On the same day, the FDIC released a request for information that may be indicate forthcoming—and potentially more favorable—rules for ILCs.
- At present, ILC applications are pending for four major automakers, Ford, GM, Stellantis and Nissan, as well as consumer finance company One Main Financial and investment company Edward Jones.[4]
- Opportunities: ILC charters are attractive to fintechs, commercial/industrial firms and non-bank financial services companies because they offer FDIC-insured deposit funding as well as direct access to the federal banking system without the activity restrictions and other impacts that follow from FRB regulation and supervision. As noted, ILC charters also permit companies to engage in commercial (i.e., non-banking) activities while still owning a bank – something not possible with a “traditional” bank charter.
- Challenges: Although the current FDIC board seems receptive to ILC deposit insurance applications, politicians on both sides of the aisle as well as banking industry stakeholders continue to criticize ILCs for the perceived “loophole” allowing these banks to avoid FRB supervision and for blurring the lines between banking and commerce. In this environment, an ILC application will almost certainly garner lengthy and heightened scrutiny and, potentially, public opposition, which could make them unattractive to prospective applicants. Further, although an ILC’s permissible product offerings are broad, the prohibition on demand deposit accounts prevents an ILC from offering truly full-service banking services.
Special Purpose National Bank Fintech Charter
- Background: In December 2016, the OCC announced that it would begin issuing special purpose national bank (“SPNB”) charters to fintech companies. An SPNB charter would allow a fintech or other nonbank financial service provider to become a narrow-scope national bank without engaging in the full range of traditional banking activities. In particular, an SPNB may engage in certain core banking functions (e.g., lending, payments) without requiring that the entity obtain federal deposit insurance (provided it does not take retail deposits). Unlike the national trust bank charter, the OCC’s authority to charter SPNBs has faced legal challenges and its current status is uncertain.
- Recent Activity: Although the OCC began accepting applications for fintech SPNB charters in 2018 and maintains that it has legal authority to issue them, no SPNB has been successfully launched, in part due to legal challenges the agency faced from state regulators opposed to the charter. Fintech companies that once expressed interest have either held off on applying or have pursued other routes to obtain banking services; today, there are no pending SPNB charters.
- Opportunities: An SPNB would in theory benefit from federal preemption of certain state laws and, like national trust banks, have a single primary regulator (the OCC), rather than the patchwork of state-level licenses often required to engage in payments or consumer finance activity. Furthermore, so long as an SPNB does not take retail deposits (and otherwise falls outside the definition of a financial institution for BHCA purposes), its parent company would not become a bank holding company within the FRB’s supervisory jurisdiction. (We note, however, that SPMBs will generally be required to become member banks of the Federal Reserve System, subscribing for stock in its applicable Federal Reserve Bank.)
- Challenges: There has never been an operating SPNB and therefore uncertainty is likely the greatest challenge for a firm evaluating this charter. Although the litigation risk that characterized its early years seems to have abated, the lack of precedent may continue to chill interest in the SPNB charter, even if the OCC is receptive to applications. Furthermore, the limited functionality of the charter (i.e., no deposit-taking) may make it less attractive to fintechs seeking to provide something closer to full-service banking.
State Chartering Options
Beyond federal avenues, several states have created special charter and license options that also are available to fintech and crypto businesses seeking a path into the regulatory perimeter. Below we describe several of these state chartering options.
- New York Limited Purpose Trust Company. The limited purpose state trust company charter is one of two alternative charter options available to fintechs and crypto firms in New York. It allows a company to act as a custodian or fiduciary and engage in money transmission, without requiring FDIC insurance (so long as the trust does not accept FDIC-insured deposits). Over the past decade, the New York Department of Financial Services (“NYSDFS”) has granted a number of these charters to crypto-focused companies (e.g., Gemini Trust Company, Paxos Trust Company (fka itBit)). Such cryptocurrency trust companies generally provide exchange and custodial services for cryptocurrencies under NYSDFS oversight.
- New York Virtual Currency Provider. The second chartering option in New York is for virtual currency providers, known commonly as the “BitLicense.” A very popular choice for participants in the digital asset industry, the BitLicense allows a holder to engage in a wide range of virtual currency activities (e.g., exchange and custodying services, buying/selling cryptocurrency). The BitLicense is not, however, a bank or trust company charter and has limited use for traditional, fiat-based financial services. MoonPay USA is the latest company to receive a New York BitLicense earlier this year (as well as a money transmitter license), bringing the total number entities holding the charter to 30.
- Wyoming Special Purpose Depository Institutions. In 2019, the state of Wyoming introduced a special purpose depository institution (“SPDI”) charter in a push to attract cryptocurrency businesses to the state. The SPDI charter offers firms the ability to engage in many bank-like activities without triggering federal banking laws. Several well-known digital asset companies operate under this license, including Kraken and Custodia Bank (fka Avanti).
- Connecticut Innovation Bank. Connecticut recently dusted off a seldom-used law authorizing special purpose, uninsured banks in the state, rebranding it as the Connecticut “innovation bank charter.” According to the Connecticut Department of Banking, an innovation bank charter has “all of the powers of . . . an FDIC insured bank, except [it] cannot accept retail deposits and does not need to comply with federal community reinvestment laws.” Banking Circle US was the first company to avail itself of this charter, receiving its temporary license in 2022 and beginning its commercial operations in February 2024. In May 2024, currency reserve bank Numisma Bank was the first Connecticut innovation bank to receive approval for an FRB master account.
- Georgia Merchant Acquirer Bank Charter. Georgia’s contribution to the alternative charter landscape is its merchant acquirer limited purpose bank (MALPB) charter. The MALPB charter allows merchant acquirers to provide direct access to the payment card networks without intermediation by a third-party bank sponsor. Supervised by the Georgia Department of Banking and Finance, MALPBs are permitted to engage in “merchant acquiring or settlement activities to directly access payment card networks” – in other words, to engage in authorizing, clearing and settling payment transactions without using a bank partner for these activities. In April 2025, Fiserv became the first operational MALPB.
Conclusion
To varying degrees, novel charters offer the promise of increased innovation in the financial services industry. Although it is premature to assess their ultimate impact, one thing is clear—more and more companies are considering and pursuing them. We expect this trend to continue in the coming months and years and will continue to provide updates as warranted.
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[1] Just yesterday, in fact, the OCC announced that it will elevate the office responsible for chartering and licensing, now to be managed by a Senior Deputy Comptroller. According to the agency, this move “affirms the OCC’s support for the formation of de novo banks, signals its openness to considering business combinations that foster competition and better support consumers and communities, and recognizes our new remit to license payment stablecoin issuers.”
[2] For more on this newly adopted legal stablecoin framework and its potential implications, please see our prior post on the GENIUS Act.
[3] FDIC Acting Chairman Travis Hill, in his prior role as FDIC Vice Chairman, was one of the three FDIC Directors who supported the approval of the Thrivent ILC’s federal deposit insurance application.
[4] Two of these applicants (GM and Edward Jones) previously withdrew applications under the Biden administration and refiled this year.
