Tech
Figure Technologies Abandons Search for Licensed Crypto Bank in US After Three-Year Fight with OCC
Figure Technologies, Inc., has withdrawn its application to become a federally chartered bank in the United States
The move ends a three-year up-and-down period during which regulators cracked down on cryptocurrency-related activity and the digital asset banking industry took a hit when regional lenders associated with the tech industry closed their doors earlier this year.
The figure application in 2020 attracted tremendous attention from Wall Street lobbyists and state banking regulators, even before it was seriously considered by the Office of the Comptroller of the Currency (OCC), where banks seek national charters. Traditional bankers worried that Figure might be the first of a new class of competitors that didn’t have to check off as many onerous compliance boxes as existing lenders.
The bank pursued the charter as a means to streamline about 200 state licenses it was maintaining for financial activity in the United States, it said. when he announced the effort.
Last year, acting OCC chief Michael Hsu praised Figure’s willingness to rework its banking plan by agreeing to require federal deposit insurance, and Hsu welcomed the opportunity to consider the Figure without a legal battle from state regulators raising objections. But the paper was formally withdrawn July 31, according to OCC records.
“Figure has decided to withdraw our banking license application as we focus the organization on other growth areas with a broad set of established banking partners,” the company said in a statement sent Thursday.
Others were happy at the news that the company had dropped the lease.
“Had Figure not withdrawn its application, both the law and common sense would have dictated that regulators reject it,” Jesse Van Tol, president and CEO of the National Community Reinvestment Coalition, said in a statement that accused the company of having insufficient plans to meet a bank’s customary obligations under the Community Reinvestment Act. “This is good news for anyone who believes we should have a stable, safe and properly supervised financial system.”
Digital anchoring he won his card by the OCC in 2021, and two other companies that had tried to immediately follow suit, Paxos and Protego, failed to convince the crypto-skeptical regulator before their conditional approvals expired earlier this year.
After a brief period during the previous administration in which the OCC welcomed cryptocurrency firms and tried to make a place for them in the banking industry, the agency – along with the Federal Reserve and the Federal Deposit Insurance Corp. – has since warned of the serious risk of the cryptocurrency sector and warned existing banks to limit their exposure to this volatile sector.
UPDATE (August 3, 2023, 20:54 UTC): Adds a comment from the Figure.