By nuPur anand
New York (Reuters) – Financial technology companies and encryption companies are seeking to become or national banks in an attempt to expand their business in light of the Trump administration, which it considers more appropriate to the industry, according to more than Decina of executives in this field.
Companies that were seeking to expand and gain credibility with clients see an opportunity during the era of US President Donald Trump to obtain licenses that were slow or heavy organizers.
“We have seen a lot of attention. We are working on many requests now,” said Alexandra Steinberg Parag, a lawyer -in -, Trutman Bieber Locke. “Is it in full swing yet?
Discussions and preparations for banking covenants have increased significantly, according to other exporters working on possible applications. They said that the number of companies that would follow them was not seen.
Although the institution needs to deal with more organizational checks if it is a bank, the cost of capital and practice can decrease in certain cases. The license can also provide more legitimacy to work in the eyes of customers and allow it to increase job opportunities and the market.
This will also allow companies to reduce borrowing costs by relying on deposits, another great feature, said Carlton Jose, a partner at the law firm Hunton Andrews Corylon, who works on three of these requests.
Industry sources and analysts said that new banks will enhance industrial competition and meet the needs of specific groups or customers.
Change in management
The increase in the activity comes after the number of new banking covenants granted by American organizers has decreased since the financial crisis, as it reached the lowest level in only four requests that are approved in 2023, according to the S& P Global.
“Companies online know that they will be larger organizational scrutiny,” said Jos. “It makes sense for them to apply for the curve, and thus get more credibility and capital at a lower cost by applying for a charter.”
Between 2010 and 2023, five new requests for bank rental were approved by the organizers annually, compared to 144 per year between 2000 and 2007, Parage and other organizational lawyers wrote in a modern open letter that made suggestions about simplifying the process.
The letter said that the approvals sometimes took years and in some cases were withdrawn by the applicants.
Requests decreased because low interest rates pressed profits, reducing the bank’s condition, while exhausted regulations deterred potential applicants.
After the collapse of the banking mediator technology for banking technology last year, the organizers also suggested strengthening the banks ’bases that operate with Fintechs.
There are expectations that Trump will enter a system more decomposing than companies that can pave the way for some banking covenants in current management.
“We have not seen a wave of rented requests since the financial crisis period, but we definitely saw more in the first Trump administration,” said Nathan Stofal, Director of Financial Intelligence Research, Director of Financial Intelligence Intelligence Intelligence.
Stofal added that the newly installed Trump organizers indicated that they focus on innovation and technology, which sends positive signals to Fintechs.
Nigel Moden, the leader of the global capital markets in EY, said that the administration “encourages the organizers to control the appetite of risk and take a more developed line.” “This may open the market to some competition.”
Earlier, Travis Hill, head of the Federal Deposits Corporation (FDIC), said that the agency will encourage more companies to follow the banks ’covenants in the coming months to ensure a healthy pipeline from the new participants in this sector.
The ruler of the Federal Reserve, Michelle Bowman, who was nominated by Trump as a vice president to supervise, stressed the need for faster approval on new banks.
Challenges
Industry experts believe that high scrutiny in granting banking covenants is a necessary step for financial stability, but they believe that the process of switching to these applications may be faster.
Two legal sources said between $ 20 million and 50 million dollars to establish a new bank. Access to capital and compliance with the anti -money laundering laws and the bank’s secret law is one of the biggest challenges faced by companies that apply for covenants.
Both sources refused to define them because the discussions are especially.
Moden said: “There are still strict licenses in their place, and thus will tell the time about the speed that new applications can move through the system,” adding that the activity related to the charter has been captured.
The United States has more than 4,500 banks. With an expected recovery in the integration and acquisitions between regional lenders, this number is expected to shrink even with some of the new participants jumping.
(Participated in NUPUR Anand reports in New York, additional reports by Saeed Azhar, edited by Lananh Nguyen and Nick Zieminski)
