Why Some Bank Charters Never Go Through the FDIC

On September 8, two very different banking applications moved forward in Washington. One had been sitting with federal regulators for more than 260 days and still needs a third agency to sign off before it can open. The other was filed that same week and, if approved, may never touch the regulator that insures deposits at all. Both are attempts to become a bank. They are not attempts at the same thing.

The first belongs to Mercury, the business banking fintech, which received conditional approval for federal deposit insurance from the Federal Deposit Insurance Corporation for the proposed Mercury Bank, N.A. in Salt Lake City, Utah. The FDIC’s order, dated September 8, 2026 and signed by Associate Director Sandra Macias of the agency’s Risk Management Supervision division, notes the application was filed under number 20251222, more than eight months before approval landed. The second belongs to Block, the payments company built around Cash App and Square, which asked the Office of the Comptroller of the Currency that same week to charter Builders Bank & Trust, N.A., an uninsured national trust bank built to custody bitcoin and stablecoins. It will not take deposits. It will not make loans. And because of that, it never has to ask the FDIC for anything.

The slow lane: what a full bank charter actually costs

Mercury’s path started in December 2025, when the company filed for a national bank charter with the OCC and, in the same package, applied to the FDIC for deposit insurance. The OCC granted preliminary conditional approval in April 2026 under Corporate Decision #1372, which lays out what a de novo, full-service national bank has to clear before it can call itself chartered. The conditions are specific and continue well past the approval date: a Tier 1 leverage ratio no lower than 10 percent for the bank’s first three years, sixty days’ written notice to the OCC’s Denver Supervisory Office before any significant change to the business plan, and OCC clearance for every senior executive officer, defined broadly enough to include the chief risk officer, the chief information security officer, the Bank Secrecy Act officer and the head of internal audit.

That was only the OCC’s half. The FDIC’s own order adds a second, separate list: $300 million in paid-in capital before the bank can open, background reports on every senior officer not already vetted, written non-objection for any change of 10 percent or more in ownership, and a complete shareholder list for Mercury Technologies, the holding company, naming every beneficial owner above that threshold. The FDIC’s approval also expires automatically one year from the order date unless deposit insurance actually takes effect first. And even with both the OCC and FDIC done, Mercury Technologies still has to register with the Federal Reserve as a bank holding company before the bank can open its doors. Three regulators, three separate clocks, one 10-percent-or-more ownership disclosure regime layered on top of another.

Mercury has been public about why it is doing this the hard way. “Becoming an FDIC-insured national bank aligns with our long-term vision and will allow Mercury to deliver a better customer experience at scale,” said Immad Akhund, Mercury’s co-founder and chief executive, when the applications were filed. Jon Auxier, Mercury’s chief banking officer, was blunter about the bar: “Few fintechs have reached the level of financial strength and operational discipline to pursue a charter at this scale.”

The fast lane: custody that never needs deposit insurance

Block’s application takes a route that skips most of that entirely. Builders Bank, as described in the filing, would be a national trust bank under direct OCC supervision, chartered to provide custody and fiduciary services, including for bitcoin and stablecoins, and nothing else. It would not accept deposits. It would not make loans. Because an uninsured trust charter never touches customer deposits in the way a commercial bank does, it does not need to go through the FDIC’s deposit insurance review at all, and it does not require Block to register as a bank holding company the way Mercury Technologies must. Lee Woolley, Block’s digital asset strategy lead and the executive proposed to run Builders Bank as president and chief executive, framed the logic behind the move: “Building on Block’s experience in the digital asset space, our history with Square Financial Services, and the deep banking expertise of the team we’ve assembled, we believe Builders Bank is well positioned to support Block’s broader vision of economic empowerment.”

The appeal is structural, not just procedural. Block has spent roughly eight years building its digital asset custody business on more than 50 separate state money-transmitter licenses, a patchwork that has to be maintained and renewed state by state. A single federal trust charter would replace that patchwork with one supervisor. It is the same calculation that has already drawn other digital asset firms toward uninsured national trust charters rather than full bank charters: the charter buys federal legitimacy and a consistent supervisory framework, without the capital requirements, the deposit insurance premiums, or the Federal Reserve holding company layer that come with taking deposits.

Why the split is happening now, not before

Bank charters have not historically moved this fast, in this volume, on either track. The OCC’s own public log of interpretations and decisions shows the agency has issued 20 Corporate Decisions, numbered CD1354 through CD1390, and 13 Conditional Approvals, numbered CA1332 through CA1362, in 2026 alone, 33 charter-related actions in a single year at an agency that used to issue a handful of new bank charters annually. Some of that volume is the full-charter track Mercury is on. Some of it is the narrower trust and custody track Block just joined. Both tracks are busier because the same forces are pushing fintechs toward federal charters from opposite directions: full-service platforms like Mercury want to stop renting balance sheets from partner banks, and digital asset custodians like Block want one federal supervisor instead of fifty state ones. Neither problem is new. What changed is that the OCC has been willing to process both kinds of applications at a pace that makes the charter route look faster than the bank-partnership model it replaces, even though the FDIC side of that route, when a charter includes deposit insurance, still runs on its own multi-hundred-day clock.

That gap between the two tracks is the real story. A trust charter with no deposits and no loans can, in principle, clear the OCC alone. A full bank charter has to clear the OCC, then the FDIC, then the Federal Reserve, each with its own capital, ownership-disclosure and executive-vetting conditions layered on top of the last. Mercury’s own preliminary conditional approval said as much in April: the OCC granted it on the express understanding that Mercury would still need to secure Federal Reserve Bank stock and FDIC deposit insurance before the bank could actually open. Eight months later, only one of those two remaining pieces is in place.

The recent charter record backs that up, and shows how rarely applicants actually take the narrow trust route Block is now proposing. When the OCC denied bunq a charter in August while letting a subprime lender’s acquisition through, the differentiator was not ambition, it was whether the applicant could show a full-service bank’s capital and compliance infrastructure already in place. Revolut’s own conditional OCC approval earlier this month followed the same full-charter sequence Mercury is on, deposits and all, which is why it remains conditional rather than final. Even the OCC’s first always-on, blockchain-native bank charter, granted this month to a startup built around continuous settlement, went the full-service route: $210 million in required capital, a 12 percent Tier 1 leverage floor, and the same FDIC and Federal Reserve steps still ahead of it that Mercury is working through. Builders Bank would be the outlier, not the pattern, if the OCC approves it as an uninsured trust charter with none of that attached.

What it means for the finance leader

For a fintech weighing whether to pursue a charter at all, the choice is no longer just charter or no charter. It is which charter, and the answer depends entirely on whether the business needs to hold customer deposits. A company whose product is custody, settlement or fiduciary services, and that can live without taking deposits or extending credit directly, has a real argument for the trust-charter route: one regulator, no FDIC insurance premiums, no bank holding company registration, and a materially shorter list of standing conditions. A company that needs to lend, hold insured deposits or operate as a true bank of record has no such shortcut. It is signing up for the OCC’s conditions, the FDIC’s $300 million capital floor and ownership-disclosure regime, and a Federal Reserve holding company application, run in sequence rather than in parallel, with each regulator free to impose additional requirements the others did not anticipate.

Board members and CFOs evaluating a charter application accordingly need two separate playbooks, not one. Capital planning for a full charter should assume nine-figure paid-in capital minimums and a multi-year path through three regulators, with covenants, like Mercury’s 10 percent Tier 1 leverage floor, that persist well past the approval date. Capital planning for a custody-only trust charter should assume a materially faster, single-regulator process, but also a hard ceiling: the same structure that skips the FDIC also forecloses deposit-taking and lending as product lines, permanently, unless the firm goes back and applies for a different charter later.

What to watch

Mercury Bank still needs the Federal Reserve’s sign-off before it can open, and both the OCC and FDIC approvals it already holds are conditional, not final, and revocable if the OCC or FDIC judges that “any interim development” warrants it, in the FDIC order’s own language. Block’s application has not yet received a public OCC response, and recent precedent for comparable digital asset trust charters suggests a review measured in months, not weeks. The more durable signal is the volume behind both applications: a regulator issuing more than 30 charter-related decisions in a single year is not treating either track as exceptional anymore. For finance leaders deciding whether a charter is worth pursuing, the operative question is no longer whether the OCC will consider the application. It is which of its two very different processes the business actually needs to survive.

Source: FDIC