Charters, Licensing & Corporate Structure

It seems the OCC does not believe the GENIUS Act creates a new charter type, contrary to speculation late last year. They would, however, be pleased to offer applicants charters they already have. In the preamble to its proposed GENIUS Act rule, the OCC adopts a narrower reading than it could have of the savings clause that follows the Act's list of activities permitted to a stablecoin issuer. The savings clause says that nothing in the activities provision "shall limit a permitted payment stablecoin issuer from engaging in payment stablecoin activities or digital asset service provider...

The drama around yesterday's Fed decision to grant Morgan Stanley a 23A exemption makes the exemption a tempting target for criticism. But a minor factual error in Governor Bowman's statement defending the decision reveals critical context that puts the decision in perspective. In case you missed it, the Fed Board voted 4-3 to approve an exemption letting Morgan Stanley move a significant trading operation from its European non-bank subsidiary to its US FDIC-insured bank. Such a transaction would usually be prohibited by the restrictions on bank transactions with their affiliates in the...

Nobody likes Vullo v. OCC, New York's challenge to the nondepository national fintech charter half a decade ago. For most people in the industry, the case stands for the idea that the OCC can’t charter national banks that don’t take deposits, unless the bank is restricted to trust company activities. The OCC dislikes this for a few reasons, but mostly because it isn’t true. The lower court’s decision against the OCC was reversed on procedural grounds, and the case went away after the applicant at issue applied for deposit insurance. Had the lower court’s substantive reasoning been put to the...

Controversy is clustering around the GENIUS Act provision granting state depository institutions national money transmission and custody powers when acting through a stablecoin issuer subsidiary. Bank trades and state regulators are pushing to repeal the provision, saying it gives preemption power to uninsured banks like Wyoming's SPDI. But how do they know the provision applies to uninsured banks? And why didn't more people notice that sooner rather than later? The answer lies in the convoluted way the Act defines "state chartered depository institution." The definition's cross-references...

How long will a GENIUS Act application really take? If you just look at the law's timelines and make some reasonable assumptions, you can be forgiven for estimating "somewhere between 120-180 days." If you've been in the bank reg world for a while, you know the real answer is "you will never know ahead of time." Why? Meet "substantially complete." The GENIUS Act requires primary federal regulators to "render a decision on the application" within 120 days of receiving a "substantially complete application," or the application is deemed approved. This four-month timeline may appear short...

The GENIUS Act purports to create three major types of stablecoin issuer. But by my count, there are at least 14 different forms that a permitted payment stablecoin issuer can take. The 14 forms differ from each other across 12 key dimensions. Some of these dimensions arise from the GENIUS Act itself. Others come from laws triggered by other characteristics of the issuer or its owner. Of these 14 forms, only ten "basic forms" are available as initial pathways to stablecoin issuance. The remaining four "evolved forms" are created when a smaller state qualified issuer crosses the $10b issuance...

Of the myriad structural choices facing a prospective GENIUS Act stablecoin issuer, the most significant is between depository and non-depository options. I see three key differences between these categories (though some play out differently for new issuers vs. existing ones.) 1️⃣ Capabilities The stablecoin issuance powers of the two categories are similar. But depository institution options provide additional capabilities such as: Federal Reserve master account eligibility, Cleaner preemption of multi-state money transmission and custody licensing, and The prospect of engaging in a wider...

No one knows exactly when the federal application window for GENIUS Act stablecoin issuers will officially open. But it's hard to see it happening much earlier than the statutory deadline in mid-July 2026. The Act mandates that the four primary federal payment stablecoin regulators issue regulations to carry out the licensing provisions and start accepting applications "before" July 18, 2026. It doesn't say how long before the deadline applications must be accepted, but the timeline is likely to be tight. One reason is the interagency process. Under the Act, federal regulators must...

The FDIC's ILC RFI is missing a very important section on funding. Deposit and funding strategy issues determine the outcome of many ILC applications. Here are some questions they could have asked: How should the FDIC assess an applicant business plan funded primarily by sources other than customer deposits? Should the FDIC's analysis differ to the extent the proposed funding consists of: (1) traditional brokered deposits, (2) securitization, (3) secured wholesale borrowings, (4) parent credit lines or asset purchases? In the case of securitization, how much weight should the FDIC give the...

There’s a question in the FDIC’s Industrial Bank RFI that will make or break an industrial bank application. Which one? That depends on the applicant, the business model, and the structure. But I can say this with certainty: the question is in there. That's because the RFI goes far beyond the high-level debate over whether industrial banks should exist or who should be allowed to own them. It drills into specific factors that drive FDIC’s decision-making on individual applications. In fact, almost every decisive issue I’ve seen in real-world industrial bank applications is reflected somewhere...

In my experience, the top success factor for a novel bank charter application is already having a customer deposit business. Why? Because the biggest hurdle most applicants face is convincing the FDIC that their deposit projections are achievable. That's something to keep in mind now that the window for ILC charters appears to be open again. Even when the "window is open," applications from lending-only companies often don’t make it far enough to be rejected on “policy” grounds. They get bogged down making the case for their business plan -- especially the deposit strategy. It's a little hard...

We advise banks, fintechs, mortgage companies and others on regulatory compliance across the full spectrum of consumer protection and prudential requirements. Our regulatory practice covers consumer compliance (TILA, RESPA, UDAP/UDAAP, FCRA, HMDA, fair lending), safety and soundness issues, payments rules, and regulatory change management. We help clients understand the impact of new regulations, build compliance programs, and maintain comprehensive regulatory inventories. Services provided by the Regulation & Compliance practice include: Capital Analysis: We assess treatment of assets,...

We assist financial institutions and fintechs with charter strategy, regulatory applications, and transactions, including bank-fintech partnerships and acquisitions. Our practice covers the full range of licensing options including commercial bank charters, ILC charters, trust bank charters, and money transmission licenses. We prepare regulatory applications, conduct due diligence on acquisition targets, advise on control issues under the Bank Holding Company Act, Bank Merger Act, and Change in Bank Control Act, and help structure bank-fintech partnerships to address regulatory expectations....

We provide comprehensive legal counsel to banks ranging from community institutions to the largest national and regional banks, as well as specialized trust, wealth management, and employee benefits institutions. Our services span regulatory compliance and examination support, licensing and charter applications, M&A transactions, and public policy advocacy before Congress and federal banking regulators. Capital Analysis: We assess treatment of assets, instruments, and transactions under bank or GSE capital rules. Consumer Compliance: We assist clients with compliance matters on a variety of...

Jim Sivon specializes in financial services law. He primarily works with financial institutions, fintechs, financial trade associations and consulting firms. Jim provides clients with strategic legal advice on charter options, including commercial bank charters, industrial loan company (ILC) charters, national trust bank charters, narrow state charters, money transmission licenses and options for foreign banks; prepares and shepherds regulatory applications related to corporate transactions and product approvals, including charter applications, Change in Bank Control filings, Bank Holding...

Katie Wechsler heads the firm's consumer and housing finance practice. She represents financial institutions and trade associations before Congress and the federal regulatory agencies, with a particular focus on federal consumer financial laws, mortgage lending and servicing, and the implementation and supervision of consumer financial protection requirements. Katie has developed a detailed understanding of the CFPB's authority, including the implementation of section 1033 (personal financial data rights) and section 1071 (small business data collection). Katie previously served as counsel...

BJ Sanford advises payments and fintech companies, U.S. and foreign banks, trade associations, investors, and policy and consulting firms. His practice centers on payments regulation, public policy, and the regulation of bank activities and structure. He also advises clients on regulatory capital, bank investments and control, affiliate transactions, the U.S. operations of foreign banks, and regulatory examinations. Payments regulation. BJ advises payments firms and banks on payment regulation, product development, and compliance with rules including Regulation E, Regulation Z, Regulation II...

Ray Natter advises on bank regulatory matters, including bank structure, securities and corporate practices, and legislative affairs. He brings experience from the OCC, the Federal Reserve Board, and the Senate Banking Committee, and is recognized as one of the leading experts in financial services law. Ray served as deputy chief counsel of the Office of the Comptroller of the Currency from 1995 through 2004, where his responsibilities included the development and review of all of the agency's regulatory undertakings; at the OCC he also led the legal department's securities and corporate...

Nancy Worth specializes in matters involving the federal financial regulatory agencies, with a particular focus on federal consumer law and fair lending. She advises on supervision and compliance matters relating to mortgages, credit cards, and other lending products, and on examination guidance, applications, reports of examination, enforcement actions, and consumer complaints. Her practice extends to commenting on agency review of legislation and Consumer Financial Protection Bureau regulations. Nancy previously served as Special Counsel for the Office of the Comptroller of the Currency...