Fintech · Industry brief

Block Inc. filed an application with the Office of the Comptroller of the Currency to charter Builders Bank & Trust as a federally regulated national bank focused on Bitcoin and stablecoin custody services. The charter application marks Block's formal effort to bring its digital asset custody operations under federal banking oversight, subjecting the business to OCC capital requirements, consumer protection rules, and anti-money laundering compliance standards. The OCC's review process typically includes a public comment period and evaluation of the applicant's management team, capital position, and business plan, though no timeline has been disclosed. Block's filing comes as federal banking regulators continue deliberating the appropriate scope of crypto activities within traditional banking, following the OCC's earlier approval of Anchorage Digital's national trust charter in 2021.

Mercury Bank N.A. received conditional approval for FDIC deposit insurance after more than 260 days, with requirements including $300 million in initial paid-in capital and submission of background information for senior executives. The Salt Lake City-based fintech, founded by Immad Akhund in 2017, previously received conditional OCC charter approval in April and is awaiting Federal Reserve approval of its bank holding company application before opening next year. CEO Jon Auxier, formerly at SoFi and Green Dot, led implementation of SoFi's national bank charter and is now overseeing Mercury's operational infrastructure and risk management setup. The development reflects a broader surge in de novo bank applications, with the OCC receiving 22 applications by August 2024 compared to 18 in the prior year, signaling increased fintech interest in pursuing full bank charters rather than partnering with existing banks.

OCC will begin processing applications starting January 2027 from national banks, savings associations, federal branches and nonbank entities seeking to issue payment stablecoins under the GENIUS Act framework, with final OCC rulemaking expected by November. Comptroller Jonathan Gould announced these new entrants will be required to comply with Part 15 standards including capital, reserve, redemption and risk management requirements. The FDIC launched a new two-phase deposit insurance application process allowing de novo applicants to receive contingent authorization within 120 days, coordinating with chartering authorities to streamline concurrent applications. OCC Bulletin 2026-27 cautioned applicants that the agency will deny filings with significant supervisory or compliance concerns and make all denials public, with two recent charter denials citing AML deficiencies and insufficient management competency. The FDIC and OCC finalized a rule defining "unsafe or unsound practices" and establishing standards for Matters Requiring Attention as part of their push to focus on material financial risks and provide greater transparency in supervision.

Dechert's financial services M&A team advised on more than a dozen transactions over the summer, reflecting convergence between traditional and alternative asset management. Key deals included Toorak Capital Partners and KKR's sale of Toorak's business-purpose lending platform and US$3 billion portfolio to Velocity Financial; T. Rowe Price's proposed acquisition of F/m Investments LLC, a US$19 billion fixed income asset manager and ETF specialist; Mount Logan Capital's acquisition of Yieldstreet Alternative Income Fund assets; Clearlake Credit's assumption of 31 CLOs with over US$5 billion in AUM from LCM Asset Management; Aberdeen Investments' acquisition of approximately £1.5 billion in closed-end fund assets from MFS Investment Management; a joint venture between Ontario Teachers' Pension Plan and M&G Investments for European CLO platform scaling; Guardian Life's transition of US$4.5 billion in separate account assets to mutual funds advised by SunAmerica Asset Management; Pantheon's acquisition of approximately US$523 million in private credit investments from BlackRock TCP Capital Corp.; Wellington Management's proposed purchase of The Hartford Funds; and Pretium's addition of Cascade Financial Services to expand lending for manufactured home purchasers. Deal flow reflects strategic focus on building scale, expanding capabilities, and adding adjacent products across asset management, wealth, and institutional channels.