Even though Square has made a big name for itself within the world of cryptocurrency, for some reason, the firm has decided to withdraw its application to operate a depository bank.
Square Cans its Banking Plans
A lot of people in the financial sector were surprised when Square applied for a banking license. Although this decision makes a lot of sense for the company, there is a lot of regulatory red tape to get through. However, it now seems that the company has officially withdrawn its application to run a depository bank.
According to company sources, the request has been withdrawn so as to “further bolster the submitted application”. Also worth noting is that while Square has rescinded its application with the FDIC, its application with the Utah Department of Financial Institutions is still active.
A Square spokesperson explained the development:
“We have been engaged in constructive dialogue with the FDIC, and our decision to withdraw and refile was a procedural step in the review process that will allow us to amend and strengthen some areas of our FDIC insurance application. Square Capital is uniquely positioned to build a bridge between the financial system and the underserved, and we continue to work closely with the FDIC and Utah DFI on our applications.”
It is not easy for fintech firms to enter the banking industry these days. In fact, it is not even easy for firms to find an active banking partner. If Square had been successful, it would have become the first company to run an official ILC bank since 2008. That business model would have allowed the company to have insured deposits without adhering to the strict guidelines traditional banks have to deal with.
This sudden withdrawal of Square’s application will most likely not impact the company’s cryptocurrency offerings. Also, if certain rumors are to be believed, it appears as though the application will be resubmitted fairly soon, although no official timeline has been announced at this stage.
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