Reinvigorating the Chartering of New Banks in the US - Federal and State Charters

These approvals signal a renewed willingness to extend the national trust bank charter beyond traditional applicants, reopening a federal pathway with national reach after nearly 15 years of limited de novo charter activity. As Comptroller Jonathan V. Gould noted at the Blockchain Association Policy Summit in December 2025: “A robust pipeline of de novo banks is crucial to a healthy financial system. New charters ensure a diverse banking sector, as new entrants bring new ideas, new products, and new services to U.S. consumers.”

At the same time, states have positioned themselves as early contributors to this pipeline. New York, Utah, Georgia, Wyoming, and Nebraska have developed specialized charter frameworks that offer non-traditional firms structured entry points into the banking system. This trend was underscored in late 2025, with PayPal’s application for a Utah Industrial Loan Company charter, and Telcoin’s final approval for Nebraska’s digital asset depository charter.

The bigger picture

Traditionally, access to banking was straightforward in the US. Firms either obtained a bank charter or relied on partnerships and intermediaries to reach customers and payment systems. Over time, this clarity has diminished as technology and changing consumer preferences have transformed the delivery of financial services.

Payments platforms, fintech companies, and digital asset providers now perform functions similar to traditional banks, such as facilitating payments, holding assets, and transferring value, but do not always meet the regulatory definition of a bank. As financial services have become more modular and technology-driven, the industry has shifted from a model dominated by banks to a more interconnected environment where specialized firms handle specific banking functions.

In response, regulators have developed more targeted supervisory frameworks, introducing options such as national trust charters, state-level special-purpose banks, limited-purpose digital asset banks, and hybrid trust-and-payments models. These developments reflect a shift in banking oversight, focusing on regulating specific activities and risks rather than requiring all participants to operate as full-service banks.

This change is reshaping competition for traditional banks, particularly in fee-based areas like payments, custody, and asset servicing. These businesses have historically depended on banks’ exclusive access to financial infrastructure. As new regulatory frameworks allow specialized firms to access parts of the banking system directly, activities and risks that were once managed by banks are now spread across a wider and more segmented financial sector.

For nonbanks and payments firms, new charter options provide a way to move beyond reliance on partnerships and participate directly in the regulated banking system. Access to a charter brings regulatory oversight, reduces dependence on sponsor banks, and increases institutional credibility. It also offers a clearer path to scaling complex activities such as digital asset custody and settlement. As more firms gain access to banking infrastructure, new entrants can compete more directly with established institutions. This broadens consumer and institutional choice while accelerating further innovation in financial services.

The OCC’s conditional approvals reinforce a long-standing regulatory pattern: innovation is typically proven at the state level before being scaled federally. States such as New York and South Dakota served as early testing grounds for digital trust banking models, informing the OCC’s decision to approve conversions such as Anchorage Trust Company in 2021 and  BitGo and Fidelity Digital Asset Services in December 2025 into national trust banks. What now distinguishes the federal charter is not experimentation, but its ability to scale those models under federal supervision.

State-Level Charter Models

Several states have taken the lead over the last few years, pushing forward to create tailored banking frameworks to welcome non-traditional firms' pathways into the traditional banking rails, long before it was a viable option at the federal level.

Key states where fintech and digital asset firms have established banks based on their special charters are:

• New York – the Limited-Purpose Trust Company charter quietly shaped the digital asset banking playbook long before the federal government stepped in. The charter has existed for decades, but its application to digital assets began in 2015, when Gemini Trust Company became the first crypto-native firm to receive a limited purpose trust company charter. The model gives digital asset firms a regulated banking home for custody and fiduciary services, without deposits or lending, making New York an early proving ground for institutional crypto activity. That credibility comes with tradeoffs: a deliberately narrow scope and a state bound footprint, which has ultimately pushed many firms to look toward federal trust charters as the path to national scale.
• Utah – the Industrial Loan Company (ILC) charter allows firms to operate full service, FDIC-insured banks without requiring parent companies to become bank holding companies, creating a distinct structural advantage for certain business models. This charter enables commercial and fintech firms to access core banking activities, including deposits and lending, while avoiding Federal Reserve supervision at the holding-company level. Institutions such as Nelnet and Merrick Bank have successfully operated under the ILC framework, and PayPal has recently applied for an ILC charter. However, despite well established legal authority and full banking powers, the ILC model continues to face heightened scrutiny from associations and advocacy groups. This type of charter remains limited to a small number of states, constraining its broader adoption.
• Georgia – the Merchant Acquirer Limited Purpose Bank (MALPB) charter was created in 2012 to allow entities engaged in merchant acquiring or settlement activities to directly access payment card networks. This charter allows companies to not have dependencies on sponsor banks, as well as reduces the cost associated with partnering with a sponsor bank. Companies such as Stripe, Fiserv, and Checkout.com recently have received approval. However, success in this model weighs heavily on Mastercard and Visa working directly with merchant acquirers without a sponsor bank.
• Nebraska - the Digital Asset Depository Institution charter, established under the Nebraska Financial Innovation Act in 2021, was designed to allow digital asset firms to operate as state chartered banks with the authority to hold digital assets in custody, issue fully reserved stablecoins, and support payment and settlement activity. This charter enables firms to move beyond licensing or trust-only models and operate within a regulated banking framework without relying on sponsor banks for core infrastructure. The first approval under this framework was granted to Telcoin Digital Asset Bank in 2025. Scalability of this model depends on access to federal banking rails, coordination with federal regulators, and the ability to operate efficiently across state lines.
• Wyoming – the Special Purpose Depository Institution (SPDI) charter was established to allow fully reserved banks to accept deposits and engage in activities incidental to banking, including digital asset custody, asset servicing, and fiduciary asset management. Wyoming amended the SPDI framework in 2020 and expanded its digital asset laws in 2021 to support crypto-native banking models without requiring FDIC insurance. Kraken Financial was the first institution to receive an SPDI charter in 2020, followed by Avanti Financial Group, which both continue to operate under the model. However, adoption has remained limited, in part due to ongoing uncertainty around Federal Reserve payment system access and the operational challenges of scaling a fully reserved banking model.

As these state models reveal both innovation and constraint, the OCC’s national trust bank charter has emerged as a pathway designed for scale, consistency, and long-term regulatory certainty. The charter provides a federally supervised framework for custody and fiduciary services without deposits, lending, or FDIC insurance, allowing firms to operate nationally under a single regime rather than navigating a patchwork of state charters.

The OCC’s five conditional approvals, coupled with 14 de novo charters applications received in 2025, signal a broader trend toward federal chartering as this pathway reopens, with fintechs increasingly viewing national trust charters as a durable alternative to state-based models.

Why should you care?

For traditional banks, expanded charter access introduces both competitive challenges and strategic opportunities. New entrants with lower cost structures and modern technology platforms are increasingly competing in payments, custody, and asset servicing, areas that have historically provided banks with stable fee income. Larger institutions may find opportunities to partner with, invest in, or acquire newly chartered fintechs to drive innovation and broaden product offerings. However, the risk of disintermediation in payments and small business banking could erode core customer relationships and fee income, particularly for regional and specialized banks. Institutions that do not adapt to these changes may find it difficult to maintain relevance as more agile competitors gain market share.

For fintech and payment firms, the evolving landscape requires a decision between maintaining sponsor bank partnerships or seeking direct charter status. Direct charter access can provide advantages such as payment system connectivity, reduced intermediary costs, increased credibility, and the ability to offer a broader range of products. These benefits, however, are accompanied by increased compliance requirements, capital and liquidity standards, supervisory oversight, and operational resilience expectations. Many technology-focused firms may have limited experience managing these obligations, and shortcomings in governance or compliance could undermine both market confidence and regulatory relationships.

For digital asset firms, obtaining a charter is increasingly viewed as a means to establish legitimacy and facilitate access to institutional relationships and broader markets. Custody providers may seek trust charters, exchanges may pursue deposit capabilities through industrial loan companies, and payment-focused firms may consider specialized state charters. Diversified firms may ultimately need to navigate multiple regulatory frameworks. These firms are subject to heightened expectations regarding consumer protection, asset safeguarding, cybersecurity, and operational resilience. Failure to meet these standards could have an impact not only on individual firms but also on confidence in the broader digital asset sector.

At the ecosystem level, expanded charter access has the potential to increase competition and foster innovation by enabling specialized firms to participate in areas traditionally dominated by banks. This may result in improved service delivery, lower costs, and a broader range of products for consumers and businesses. However, the distribution of banking activities across a wider array of institutions introduces risks, such as inconsistent compliance standards, operational failures, and the potential for risk to migrate beyond established supervisory frameworks. The next phase of competition will test whether broader access to banking infrastructure enhances the resilience and effectiveness of financial services or introduces new vulnerabilities.

What is next?

Expect continued momentum in relation to:

• Additional OCC trust charter applications and approvals.
• Further refinement of state digital asset banking regimes.
• Increased scrutiny of governance, liquidity, and operational risk on chartered nonbanks.

The next phase of this transition will focus less on access to the banking system and more on how effectively firms operate within it. Demonstrating strong compliance, managing financial and operational risks, and contributing to competition, innovation, and consumer outcomes will be central. Regulators and market participants will be watching whether new entrants strengthen the broader financial ecosystem by expanding access, improving service delivery, and upholding the safety and soundness standards expected of regulated banking institutions.

The future of banking will be shaped not by which firms obtain charters, but by which institutions demonstrate responsible operations, sustainable innovation, and the ability to earn and maintain trust within the financial system.

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