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FinTechs pursue direct connections to the Fed with National Trust Bank Charters to sidestep the piecemeal approach of obtaining state-by-state licenses

July 9, 2025 //  by Finnovate

The applications for national trust bank charters from Wise, Ripple and Circle signal intent to connect directly to the Fed’s payment systems. Should the applications be approved, the charters would allow these firms to sidestep the piecemeal approach of obtaining state-by-state licenses, and in other cases (as would be seen with Wise, which is based in the U.K.), relying on correspondent banking for cross-border money movement. Without a charter in hand, the FinTechs would traditionally seek 50 state-by-state money transmitter licenses, or they could seek to own a bank (as has been seen with the likes of LendingClub) or become one. The national trust bank charter, at a high level, sets the stage for FinTechs to operate under the scrutiny of a single regulator (the OCC), while branching out into banking services, such as settlement of transaction, with the exception of holding insured deposits or lending. Circle’s move to gain a national trust charter would enable the firm to offer those custody services. Wise, with charter in hand, would be able to connect directly to the Federal Reserve’s payment rails to clear and settle U.S. dollar-based payments. The direct access to the Fed would help bypass those middlemen that are a staple of the correspondent banking system, where cross-border payment fees, as estimated by the World Bank, stand at about 6.5%. Ripple subsidiary Standard Custody & Trust Company applied for a Federal Reserve master account as of the end of June. This account would enable Ripple to custody the reserves for its stablecoin with the Fed and issue and redeem stablecoins outside normal banking hours.

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Category: Networks Processors & PSPs, Innovation Topics

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