Cryptocurrency and fintech firms are taking advantage of policy changes under the Trump administration to apply for banking licenses, paving the way for greater financial legitimacy and lower borrowing costs.

Regulatory Shift
According to a Reuters report, many crypto firms have begun the process of applying for banking licenses to expand their operations. At least half a dozen industry executives confirmed that crypto businesses see a new opportunity to enhance their credibility with customers by obtaining a banking license.

A banking charter is a legal license that allows companies to operate and provide financial services under the supervision of a regulatory agency. This license helps determine the organizational structure, permitted activities, as well as ensuring transparency and financial security for customers.

Surge in Applications
Alexandra Steinberg Barage, a partner at law firm Troutman Pepper Locke, said there has been a significant increase in applications:

“We’ve seen a lot more interest. We’re processing a number of applications right now,” Barage said.

She also noted that while companies remain “cautiously optimistic,” they are waiting for more clarity as the Trump administration appoints new leaders for financial institutions.

Under the Biden administration, the process of obtaining a bank charter has been fraught with delays or rejections from regulators, particularly in the cryptocurrency space. By contrast, when Trump returned to the White House, discussions about bank charters in the industry have ramped up, although many companies are still weighing whether to formally apply.

Benefits of a Bank Charter for Crypto Companies
While a bank charter means more scrutiny, companies still see major benefits from obtaining one. Carleton Goss, a partner at Hunton Andrews Kurth, which is assisting three companies in the process, said:

“A bank charter can help reduce the cost of borrowing by using deposits. It also enhances credibility and opens up new business opportunities.”

He also recommends that companies stay ahead of the curve to secure a foothold in the growing financial market.

Interest from major financial institutions
The interest in legalization is not only coming from crypto companies, but also from Wall Street banks. In February, several major banks began looking into opportunities to partner with the crypto industry through initial public offerings (IPOs).

Exchanges like Gemini and Bullish have expressed interest in going public, while Kraken and Circle – the stablecoin issuer – are also exploring the possibility.

Conclusion
The Trump administration’s move to make it easier for crypto companies to apply for banking licenses could usher in a new era for the digital finance industry. If this trend continues, it could open up the crypto market to more affordable capital, while also increasing its legitimacy in the eyes of investors and customers.