Dakota Eyes Pivot From Money Services Firm to Regulated Bank

Programmable money movement firm Dakota is seeking a national trust bank charter, according to a Tuesday (Aug. 4) message to customers.

A charter from the Office of the Comptroller of the Currency would allow Dakota to become “a federally regulated provider of digital asset custody, stablecoin issuance and related services,” the message said.

“For you, that means fewer layers between your product and the financial services underneath it,” the message said. “Fewer intermediaries mean more control, more reliability and a cleaner experience for the people you serve. That’s always been the point. The less that sits between you and what you’re building, the better the product you can put in front of your customers.”

The announcement puts Dakota in the company of several other companies showing interest in landing a bank charter following years of muted activity, as PYMNTS reported last month.

“Organizers continue to pursue de novo institutions for a variety of business models, reflecting a broader view among some FinTechs that direct federal supervision can offer greater long-term control than relying exclusively on sponsor-bank relationships,” the report said.

A national charter provides advantages that go beyond regulatory status. Depending on an institution’s business model and approvals, a charter can provide a single federal supervisory framework, expand lending and deposit capabilities, lessen their reliance on third-party banking partners and give institutions more authority over product development and customer relationships.

“They want to provide 21st-century solutions to their clients and customers,” Rodney E. Hood, former acting comptroller of the currency, said in an interview with Competition Policy International (CPI), a PYMNTS company published in January. “They recognize the strength and vitality that comes from a national bank charter.”

Among the companies to receive an OCC banking charter is digital lending platform Upstart, which announced its conditional approval last month.

Annie Delgado, chief risk officer at Upstart and proposed CEO of Upstart Bank, said in a news release that a charter process can be time-consuming and rigorous.

“We’ve been challenged extensively throughout the process, and that’s exactly what should happen when an institution is seeking the privilege of becoming a national bank,” Delgado said.