“It’s not the plan,” PayPal’s CEO said in April when Semafor asked him whether the fintech giant planned to turn itself into a regulated bank. “We’ve kept it very balance-sheet-light, and we’ll let banks do what banks do really well.”
Fast forward eight months and PayPal is becoming a bank. The company applied to Utah’s state regulators for a slimmed-down license that would allow it to take federally insured deposits and make loans to its business customers, “reducing reliance on third parties.”
Fintech players that launched proudly as antibanks — content to peel away their customers and avoid the regulatory overhead — have instead joined them, including SoFi, Varo, Lending Club, and Revolut. It’s an odd fixture of the lending economy, given the vast pools of nonbank money available.
Robinhood considered the move in 2019 but decided against it, CEO Vlad Tenev told Semafor last year, because “the government does not want banks to grow quickly.” But he said the company is “not ideologically opposed” and may reconsider as it ramps up its credit card business, which is currently white-labeled by a community bank in Washington state. (A Robinhood banking pivot is on our 2026 bingo card, which we’ll be bringing to you later this month.)
Meanwhile, a handful of crypto companies including Circle last week got conditional licenses to become trust banks, meaning they can’t take deposits or make loans but have access to other parts of the financial system. After the Biden administration failed to approve a single fintech bank charter application, Trump has “rolled out the welcome mat,” Michele Alt, a partner at fintech consultancy Klaros, tells Semafor. New applications are at their highest levels since 2020.
