Revolut Secures British Banking License, Hints at Future Offerings
On Wednesday, the fintech firm received full banking authorization in the UK while simultaneously pursuing a federal banking charter application in America.
On Wednesday, fintech firm Revolut revealed that it has established a banking operation in the United Kingdom following the receipt of regulatory clearance from the Prudential Regulation Authority (PRA), which serves as the regulator for banking and financial services in the country.
According to the company's statement, Revolut Bank UK will start providing deposit account services to both individual customers and business entities, with qualifying deposits receiving protection up to 120,000 British pounds ($160,958) through the Financial Services Compensation Scheme (FSCS).
Similar to how the Federal Deposit Insurance Corporation (FDIC) protects American bank deposits up to $250,000, the FSCS provides a protective mechanism for customer deposits held at banks and additional financial institutions.
Current customers of Revolut UK will undergo a gradual migration to the new account structure, with the complete transition process anticipated to span several months, the company indicated.
According to the company's statement, the newly established bank creates opportunities for introducing a "wider range" of financial services down the line, with lending being among them.
In January, Revolut submitted applications for complete banking authorization in Peru and a federal banking charter in the United States, reflecting a broader trend where crypto and fintech companies are transforming themselves into banks, effectively dissolving the boundaries between digital and conventional finance.
Crypto industry has eyes on banks, but banking industry pushes back
An increasing number of cryptocurrency industry firms are pursuing national bank charter acquisitions in the US alongside other regulatory designations that would enable direct integration of crypto into the conventional financial infrastructure.
Among these firms are Ripple, a blockchain developer company, Paxos, which provides institutional-grade blockchain infrastructure, and Circle, a stablecoin issuer.
In March, the Federal Reserve Bank of Kansas City granted cryptocurrency exchange Kraken a limited-purpose master account, providing the company with direct access to the Federal Reserve's payments system, albeit with certain restrictions.
The granting of Kraken's limited-purpose master account marked an unprecedented milestone for the cryptocurrency sector.
Nevertheless, a trade organization that represents the banking industry in the US is reportedly contemplating the filing of legal action against the Office of the Comptroller of the Currency (OCC) in an effort to prevent crypto companies from obtaining bank charters.
The banking industry's lobbying arm has consistently opposed yield-bearing stablecoins and the provision of banking services by crypto companies, citing concerns that financial services built on blockchain technology will diminish the market dominance of conventional banking institutions.