From Rebels to Banks: Why the Crypto Industry Is Finally Embracing Legacy Finance
Key Takeaways:
Bogart stressed that crypto companies, while aiming to be bank-like, did not want to become banks because of the burdens that this classification involved. “They didn’t want the regulatory constraints, compliance burden, or the lower market multiples. They wanted to get close but not cross the line,” he assessed.
Nonetheless, over 20 crypto companies, including heavyweights like Ripple and Coinbase, are pursuing or have already obtained Office of the Comptroller of the Currency (OCC) charters.
Bogart explained that this shift is linked to the collapse of the sponsor bank model, as banks were co-opted into dropping some customers, including crypto-linked businesses, elevating the risk of isolation.
While the OCC charter is rather limited in its scope and does not allow these companies to receive deposits or open lending opportunities, he acknowledges that it gives them “a single federal license, one regulator and, perhaps most importantly, the credibility to be a counterparty to serious institutional capital.”
This simplifies regulatory compliance and unlocks the largest banks and sovereign wealth funds as customers, allowing crypto firms to comply with their stringent requirements, opening these markets to grow their customer base.
“A federally chartered and supervised institution clears those filters much cleaner than a state-licensed model does,” Bogart concluded.
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