Nikolay Storonsky is the founder and CEO of fintech start-up, Revolut.

Revolut, the biggest European digital bank with 13 million users, is close to applying for a banking license in the U.S., CNBC has learned exclusively.

The London-based fintech firm plans on applying for a charter with the Federal Reserve Bank of San Francisco and California’s Division of Financial Institutions within weeks, said people with knowledge of the matter.

The move from Revolut, valued at $5.5 billion in a February fundraising round, is the latest example of one of a new breed of digital challengers seeking to become a regulated bank. In March, payments giant Square won approval to start a bank. Earlier this year, Lending Club, a fintech pioneer, bought Radius Bank for $185 million in part to gain a national bank charter.

Even though Revolut’s bank charter will be with California, it will allow the lender to operate widely throughout the U.S. via interstate agreements, said one of the people, who declined to be identified speaking about the start-up’s private plans.

Still, its move to apply for a state banking charter rather than one through a national regulator like the Office of the Comptroller of the Currency drew questions from some industry observers.

The U.S. financial regulatory regime is large and fragmented, and fintech startups have taken several different approaches to breaking into the market. The most successful so far, like Chime and Current, have simply partnered with existing banks.

Square’s bank will be an industrial-loan company based in Utah and supervised by the Utah Department of Financial Institutions and the Federal Deposit Insurance Corp. Last month, cryptocurrency exchange Kraken Financial won a bank license in Wyoming.

Meanwhile, state financial regulators have clashed with the OCC over its move to create a special charter for fintech firms.

Chad

  • The OCC has been mulling a special-purpose banking charter aimed at fintechs that process payments.
  • Currently, non-chartered fintechs are regulated and licensed state-by-state to process payments.
  • Both state regulators and bank trade associations have opposed the idea of a special-purpose charter, saying that new risks could be introduced by offering charters to fintechs and big tech.
  • The OCC argues that there are no new risks being introduced, but the oversight would be migrated from the state to the federal level.  
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Over the past decade, fintechs have become more than a niche group of disruptive startups out of Silicon Valley. Today, fintechs like Stripe and Square have achieved massive scale — and valuations — and are an essential part of the financial-services industry.

But most fintechs aren’t licensed banks, meaning they don’t have a banking charter issued by the Office of the Comptroller of the Currency (OCC), one of the key regulators overseeing consumer banking. Instead, they are regulated and licensed at the state level, which means to operate nationally they have to work with 50 different regulatory bodies.

That could soon change, however, as the OCC is mulling a charter aimed specifically at fintechs that process payments, allowing them to be regulated at a national level. 

As a result, payments fintechs would be able to sidestep state-by-state regulation. The charter would be a national version of a state money transmission license, which fintechs currently have to apply for in each state they operate in.

Through this charter, the OCC would get insight into billions of dollars worth of payments handled by fintechs that currently occur outside its jurisdiction. Similar to the way the regulator now monitors banks, the OCC would review fintechs’ control frameworks and risk management.

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