The U.S. banking charter, as the name implies, has traditionally been the preserve of legacy institutions built on branches, balance sheets and incremental change.
In other words, it’s been the preserve of banks.
Today, that boundary is dissolving. FinTech and cryptocurrency-native firms, from payments giants to stablecoin issuers, are increasingly pursuing national bank charters and special purpose designations with success, signaling a profound shift in how financial innovation intersects with regulation.
“They want to provide 21st century solutions to their clients and customers,” Rodney E. Hood, former acting comptroller of the currency, told Competition Policy International (CPI), a PYMNTS company, in an interview. “They recognize the strength and vitality that comes from a national bank charter.”
Rather than weakening the system, the interest from blockchain and FinTech firms in banking charters reflects confidence in it, he said.
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During his tenure leading the Office of the Comptroller of the Currency, he said he welcomed traditional and novel de novo applications as a sign that U.S. banking remained “healthy, safe and continuing to serve its mission.” In his view, bringing innovative firms inside the perimeter of federal supervision is preferable to letting them scale in regulatory gray zones.
The Importance of Anchoring Innovation to Enduring Principles
Hood’s regulatory philosophy is that technology may change rapidly, but the principles that govern safe banking do not. One of the defining challenges of his own tenure was reconciling innovation cycles measured in months with statutes written decades earlier.
“Technology was moving far faster than many of the existing statutes,” Hood said, adding that the regulator’s role is to “anchor the financial system to enduring principles.”
Those anchors are safety and soundness, strong governance, operational resilience and financial inclusion.
This framework shaped the OCC’s initial approach to FinTech charters and continues to inform today’s debates. Hood said he rejected the idea that innovation inherently reduces risk. Instead, “innovation doesn’t at all eliminate risk; it repackages it.”
The real question for regulators is not whether an activity is new, but whether it is “understandable, governable and resolvable under stress,” he said.
A bank charter “is not a trophy, and it certainly isn’t a product label, but it’s a public trust,” he said.
“A federal charter should never be construed as an end run around supervision, and it should certainly never be a pathway to scale without accountability,” he added.
With the benefits of national reach and deposit confidence come obligations, such as capital discipline, continuous supervision and rigorous compliance.
At the same time, Hood warned against treating innovation as inherently suspect. Responsible experimentation should be enabled and not stigmatized, provided it meets banking-grade standards. The balance lies in what Hood called the “equivalency of outcomes.”
“Nothing changes about safety and soundness because they’re new novel activities,” he said.
If an institution performs core banking functions, it must meet core banking expectations. Governance, consumer protection, accountability and credible recovery planning are not optional simply because the delivery model is digital.
Financial Innovation as a Systemic Safety Issue
As FinTech and cryptocurrency activity accelerate, regulatory fragmentation has become a central concern. State-level initiatives, most notably Wyoming’s special-purpose depository institutions charter, have created alternative pathways for digital asset firms. Hood said these experiments are valuable but potentially destabilizing if left uncoordinated.
“We need cooperative federalism, not competitive federalism,” he said.
States have long served as laboratories of innovation. However, when activities become national or systemically significant, “the answer cannot be 50 different rule books and a race to the bottom,” he said.
A charter should be granted only when an applicant can “operate like a bank, not just grow like a technological platform,” he said.
He pointed to the importance of common taxonomies for stablecoins and custody, as well as harmonized standards for capital, liquidity, cybersecurity and anti-money laundering compliance. Without these guardrails, firms may be tempted to shop for the most permissive regulator, a dynamic that undermines trust in the system as a whole.
“The traditional guardrails … do cover a great deal of the cyber risk or the crypto risk,” Hood said, adding that while gaps exist, the answer is recalibration, not wholesale reinvention. Creating a separate cryptocurrency rulebook could increase regulatory ambiguity rather than reduce it.
“The system that we have to date really is enduring,” Hood said, underscoring his belief that banking supervision in the United States has proven resilient precisely because it evolves incrementally.
America’s advantage lies in its strong prudential tradition, he said. The challenge is not speed but integration, ensuring that innovation is absorbed into the system without eroding public trust.
“I don’t want anyone to think that the U.S. is behind,” he said.
Multiple agencies, including the OCC, Federal Deposit Insurance Corp., Federal Reserve, Securities and Exchange Commission and Commodity Futures Trading Commission, are aligning around permissible activities and supervisory expectations. Guidance from Treasury and the National Economic Council further signals a coordinated federal effort.
“The future of banking is not going to be defined by technology alone, but by whether we compare innovation with integrity, speed with supervision, and progress with public trust,” Hood said.
