The current regulatory regime in the US promised a lighter touch and more de novo charters. Sure enough, there has been a flurry of activity with a wide range of applications being submitted from long time payment providers like Paypal, neobanks looking to break free from their BaaS sponsors, and even silicon valley insiders looking to build the bank of the future like Erebor.

Reading the various applications and hearing the varied business plans raised a very fundamental question: What if bank charters are being issued to companies that don’t actually want to be banks?

We tend to treat a charter like a finish line — as if the moment you get one, you’ve crossed into some higher state of legitimacy. But a charter is a regulatory status. Being a bank is an economic role. And those two things may be drifting apart.

In this episode of Breaking Banks, Jason Henrichs and Jeff Taft, Partner at Mayer Brown, dig into that tension. Jeff has advised on bank formations, regulatory strategy, and some of the most complex de novo and specialty charter conversations in the market. He has a front-row seat to how applicants think about charters — and how regulators evaluate readiness to operate as banks.

This conversation was recorded live as part of FintechXchange put on by the Fintech Center at the University of Utah. This Hot Takes series is powered by U.S. Bank.

Now let’s dig in to the question: are most charter applicants trying to become banks — or trying to become regulated?