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With OCC’s license, it will be easier for SoFi to become a national bank. However, the company still has to wait for formal approval from the Federal Deposit Insurance Corporation and the Federal Reserve.
On Wednesday, the Office of the Comptroller of the Currency (OCC) granted conditional approval to Social Finance Inc (commonly known as SoFi) for operating as a national bank in the U.S. For SoFi, the license means an important step on the way to becoming a full-service financial institution. The company has been offering everything from cryptocurrency to fraction shares of stock. Now, SoFi will be able to receive deposits and make loans on its own.
OCC is an independent bureau within the U.S. Department of the Treasury. It serves to charter, regulate, and supervise all national banks and federal savings associations as well as federal branches and agencies of foreign banks. OCC carries out its mission by issuing banking rules and regulations and providing legal interpretations and guidance on banks’ corporate decisions that govern their practices. Besides, OCC evaluates applications for new bank charters or branches, for other proposed changes in the corporate structure of banks or their activities. As well as for foreign banks that wish to operate in the United States under an OCC charter.
With OCC’s license, it will be easier for SoFi to become a national bank. However, the company still has to wait for formal approval from the Federal Deposit Insurance Corporation and the Federal Reserve. As OCC stated, “final approval and authorization for the Proposed Bank to open will not be granted until all preopening requirements are met”.
SoFi spokesperson said:
“We look forward to continuing to work with the OCC on the next steps of the application process. Along with the Fed and FDIC.”
SoFi’s Entrance to National Bank Charter
Founded in 2011, San Francisco-based SoFi provides student loan refinancing, mortgages, personal loans, investing, and banking services. In 2019, SoFi launched zero-fee crypto trading. Further, in December last year, it received virtual currency and money transmitter licenses from the New York State Department of Financial Services (DFS). With the licenses, SoFi started supporting cryptos like Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC), and Stellar Lumens (XLM).
Notably, SoFi’s conditional approval by OCC comes when banks are facing challenges amid fierce competition and a low-interest-rate environment. For SoFi itself, obtaining a national bank charter will be slow and costly. It may take as many as three years before the bank will get its own way. But this leaves SoFi undaunted. Yesterday, along with OCC’s approval, SoFi also announced the launch of its first-ever credit card. According to SoFi, the credit card offers a “revolutionary card experience that allows people to pay down debt with rewards that are earned for spending”. Members will also be able to set up automated redemptions into their account of choice. As well as creating a frictionless way to redeem cashback, pay down debt, invest, or save for the future.