Robinhood Stock Trading App | Applying for a National Banking Carter

Robinhood stock trading app: A National Banking Charter is attractive to many financial tech companies but alas! it is very hard to get. That hasn’t stopped California-based stock trading app Robinhood from approaching regulators at the Office of Comptroller of the Currency (OCC), with an ambition to acquire necessary licenses allowing it to receive a national banking charter. This would effectively class the platform as a bank. 

The idea is to become a more official banking platform, covering all bases; from cryptocurrency to stocks and fiat accounts for its customers. Currently, Robinhood boasts a 4 million strong user-base who enjoy commission-free stock trading. In the last year, alongside equity investments, it introduced the ability to trade Bitcoin and Ethereum for users across 16 states. If the company can receive ‘bank’ status it could offer more services such as savings accounts to its customers and become a one-stop-shop for finance.

Robinhood Stock Trading App

At present, Robinhood is registered with FINRA as a broker-dealer and is regulated by the Securities and Exchange Commission (SEC). If the company was to offer traditional banking services, it would join the ranks of several Fintech startups who have the idea of stirring people away from larger banks. This is rather reflective of current trends encouraged especially by those who trade in cryptocurrencies. Promises of higher interest rates, a smoother and convenient user experience, along with transparency, are attractive to many potential clients.

National Banking Charter Regulations

But the regulations surrounding banking services are vast and complicated. Most startups that have been offering banking services are usually affiliated with an existing institution and haven’t actually acquired a banking license themselves. Licenses can in some cases take years to finalize.

Other companies who are said to also be registering as a national bank include Circle – a $3billion crypto finance company and the world-renowned crypto exchange Coinbase.

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Joseph Otting, Comptroller of the Currency recently stated: “Most Fintechs come to us because they have heard of this thing called a national banking charter that gives them pre-emption across state lines…when they come and they speak to us, and they understand what it really takes to be a bank, they kind of glaze over and often leave skid marks leaving the building.”

It seems the task is an undertaking not to be reckoned with. Will Robinhood succeed? or leave the OCC with its tail between its legs?

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