Robinhood Withdraws Bank Charter Application Due to Regulatory Challenges

Stock and cryptocurrency trading platform Robinhood has withdrawn its bank charter application with the Office of the Comptroller of the Currency.

As CNBC reported on Nov. 27, Robinhood voluntarily decided to withdraw its application with the regulator due to the challenges the company could face in receiving a charter. A spokesperson said that “Robinhood will continue to focus on increasing participation in the financial system and challenging the industry to better serve everyone.”

Robinhood applied for a bank charter with the United States Office of the Comptroller of the Currency in April, asserting that it would be the first step towards being able to offer traditional banking products and services.

The full-service bank would have operated alongside the mobile-focused trading arm, which enables users to trade crypto, funds and options on their phones and desktops.

Regulatory scrutiny and latest developments

Previously, Robinhood faced regulatory scrutiny after it rebranded the service’s name to “cash management” and removed references to deposit protection. U.S. politicians reportedly accused the company of failing to offer full transparency its 850,000+ consumers.

Linkedln recently ranked the startup 7th on the “The 50 hottest U.S. companies to work for” list, after it received regulatory approval from Britain’s Financial Conduct Authority, and raised $323 million in a funding round run in August.

Bank licenses issued to crypto businesses

In late October, Swiss-based cryptocurrency bank Sygnum — which gained a Swiss banking license in August 2019 — received the go-ahead to offer banking services in Singapore in the form of a capital markets services license from the Monetary Authority of Singapore, the Asian city-state’s central bank.

In April, Puerto Rico-based cryptocurrency trading platform San Juan Mercantile Exchange (SJMX) launched banking operations for institutional clients.