Crypto Payments Platform Square Withdraws Banking License Application

Announcements, News | July 6, 2018 By:

Payments platform Square has withdrawn its application to the Federal Deposit Insurance Corporation (FDIC) for a special purpose banking license, although it plans to refile its paperwork at a later date.

In September 2017, Square applied with the FDIC for a special “industrial loan company (ILC)” license, which allows non-traditional financial firms to carry out banking services and collect government-insured deposits. In October, the Independent Community Bankers of America (ICBA) filed a petition to the FDIC to deny Square’s application and to institute a two-year moratorium on ILC deposit-insurance applications. According to the ICBA, “Square’s application as an Industrial Loan Corporation is designed to avoid legal prohibitions and restrictions under the Bank Holding Company Act.”

Speaking about the withdrawal, a Square representative told Reuters that they have been engaged in constructive dialogue with the FDIC, and their decision to withdraw and refile was a procedural step in the review process that will allow them to amend and strengthen some areas of their FDIC insurance application.

The representative also revealed that its separate ILC charter application with the State of Utah Department of Financial Institutions remains active. “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.”

The representative, however, declined to comment on what needs to be strengthened in the application and the anticipated time frame for re-applying with the FDIC.

The news of Square’s decision to withdraw from the process came after the New York State Department of Financial Services (NYDFS) granted Square a virtual currency license, which allows its users to trade bitcoin in the state.