Crypto Companies Race to Secure Banking Foothold in the US: Navigating Domestic Charters and Puerto Rico’s International Licenses

In the fast-evolving landscape of cryptocurrency and financial technology, 2025 has marked a pivotal year for crypto firms seeking to bridge the gap between digital assets and traditional banking. With regulatory clarity emerging under favorable political shifts, companies like Paxos, Circle, Ripple, Coinbase, BitGo, and others are aggressively pursuing banking charters to legitimize their operations, expand services, and tap into mainstream finance. This race is driven by the need for stability, compliance, and access to essential banking infrastructure, such as Federal Reserve master accounts and payment rails. However, the path isn’t straightforward. Crypto companies face a strategic choice: pursue a domestic U.S. bank charter, which offers FDIC insurance but restricts services to U.S. persons only, or opt for an international license in the U.S. territory of Puerto Rico, which allows global reach without FDIC protection. As of August 19, 2025, this competition is intensifying, with implications for innovation, consumer protection, and global financial inclusion.

This article delves into the motivations behind this rush, the mechanics of each option, real-world examples, pros and cons, and what the future holds for crypto’s integration into the banking sector.

The Motivations: Why Crypto Firms Are Chasing Banking Charters

Crypto companies have long struggled with “de-banking,” where traditional institutions sever ties due to regulatory risks, high compliance costs, and the perceived volatility of digital assets. Events like the 2023 banking crises involving Silvergate and Signature Bank underscored the fragility of crypto’s reliance on a handful of friendly banks. Securing a banking charter allows firms to internalize services like custody, payments, and stablecoin issuance, reducing dependency on third parties and enhancing credibility.

The push accelerated in 2025 amid a more crypto-friendly regulatory environment, potentially influenced by pro-innovation policies. For instance, the GENIUS Act and other legislation have signaled openness to tokenized assets and stablecoins. Companies view charters as a gateway to federal oversight, which can unlock opportunities like direct Fed access and faster settlements. As one analyst noted, “Crypto firms are laying the plumbing for potentially huge new business lines as Washington readies new rules.”

Key drivers include:

• Stablecoin Dominance: Issuers like Paxos (PYUSD) and Circle (USDC) aim to bolster their tokens’ legitimacy.
• Custody and Payments: Firms want to offer secure asset management and seamless transfers.
• Expansion: Charters enable scaling into lending, treasury services, and even tokenized real-world assets (RWAs).

However, opposition from banking trade groups highlights tensions, arguing that crypto’s risks could undermine financial stability.

Option 1: Domestic U.S. Bank Charters – FDIC Protection with Strings Attached

A domestic U.S. bank charter, typically issued by the Office of the Comptroller of the Currency (OCC), represents the gold standard for integration into the American financial system. These include national trust bank charters, which are limited-purpose licenses focused on fiduciary activities like asset custody and trust management. While not full-service banks (they often can’t accept deposits or issue loans), they provide a foothold.

How It Works

To obtain a charter, companies submit applications detailing their business model, capital reserves, risk management, and compliance with anti-money laundering (AML) and know-your-customer (KYC) rules. The process involves rigorous scrutiny, often taking 12-18 months. Successful applicants gain OCC oversight, which aligns them with federal standards.

A key benefit is access to FDIC insurance, which protects customer deposits up to $250,000 in case of failure. However, this comes with a major limitation: services are restricted to U.S. persons only, defined as citizens, residents, or entities based in the U.S. This ensures compliance with domestic regulations but curtails global ambitions.

Pros and Cons

Case Studies

• Paxos: In August 2025, Paxos reapplied for a national trust bank charter after its 2021 conditional approval expired. As the issuer of PayPal’s PYUSD stablecoin (now over $1B in market cap), Paxos aims to manage assets and process payments more efficiently under OCC supervision. This move follows a $26.5M fine for BUSD-related violations, signaling a push for redemption through federal legitimacy.
• Circle: The USDC issuer applied in 2025 to expand its stablecoin operations, joining the race for Fed access. Circle sees this as a way to strengthen its model amid growing demand for regulated digital dollars.
• Ripple: Applying for a trust charter to support RLUSD and XRP adoption, Ripple benefits from recent SEC waivers that could ease “bad actor” concerns.
• Others: Coinbase, BitGo, and Fidelity Digital are also in the mix, with applications filed since April 2025. This spate has prompted trade groups to urge delays, citing risks.

These efforts reflect a broader trend: Over six crypto giants are awaiting OCC approval, potentially transforming the sector.

Option 2: International Licenses in Puerto Rico – Global Reach Without FDIC Safety Net

Puerto Rico, a U.S. territory, offers an alternative through the International Financial Entity (IFE) license under Act 273. Regulated by the Office of the Commissioner of Financial Institutions (OCIF), IFEs function as international banks, providing services like custody, payments, and asset management to non-U.S. clients.

How It Works

The application process is two-staged: First, obtain a permit to organize (requiring $10M paid-in capital), then secure the full license. IFEs must maintain a physical office in Puerto Rico with at least four full-time employees. Unlike domestic charters, IFEs can serve clients worldwide (subject to sanctions and AML rules), but they cannot target U.S. residents or operate as full crypto exchanges. No FDIC insurance is available, as these are not deposit-taking institutions under federal purview.

This setup leverages Puerto Rico’s tax incentives (e.g., Act 60) and U.S. territorial status, allowing access to American markets while focusing internationally.

Pros and Cons

Case Studies

• FV Bank: A Puerto Rico-based IFE offering regulated crypto custody for Bitcoin, Ether, and more in the U.S. It received OCIF permission in 2025 to expand services, demonstrating how IFEs can blend crypto with international banking.
• General Trends: IFEs are popular for crypto payments and money transfers, with over 100 licensed since 2013. Companies like CrossTech highlight the elaborate process but emphasize global flexibility.
• Crypto-Specific: Under Act 136-2010, Puerto Rico licenses virtual currency businesses, complementing IFEs for MSB-like operations.

Comparing the Two Paths: Which Foothold to Choose?

The choice boils down to strategy:

• Domestic Charters suit U.S.-focused firms prioritizing trust and insurance, ideal for stablecoin issuers targeting American users.
• Puerto Rico IFEs appeal to global players, offering broader reach for international remittances and custody.

A direct comparison:

Hybrid approaches exist, where firms hold both for comprehensive coverage.

Challenges and Regulatory Hurdles

Both paths face obstacles:

• Opposition: Banking lobbies urge pauses on crypto charters, fearing systemic risks.
• Compliance: AML/KYC rigor and fines (e.g., Paxos’s $26.5M) deter applicants.
• Political Winds: A “Trump era” boost in 2025 has encouraged filings, but shifts could reverse gains.

On X, discussions highlight excitement, with posts noting Telcoin’s upcoming charter bank opening and Paxos’s reapplication signaling mainstream adoption.

The Future: A Hybrid Crypto-Banking Ecosystem

By late 2025, approvals could reshape finance. Domestic charters may dominate U.S. stablecoins, while Puerto Rico IFEs fuel global DeFi and remittances. Innovations like self-custody wallets and tokenized assets will thrive under regulation. Experts predict partnerships between crypto firms and banks, with value migrating to regulated hybrids.

In conclusion, this race isn’t just about charters—it’s about crypto’s maturation. Whether through FDIC-protected domestic paths or globally flexible IFEs, these footholds promise a more inclusive, efficient financial system. For crypto companies, the prize is clear: legitimacy in a world where digital and traditional finance converge.