Banking as a Service

The regulatory reckoning for the banking-as-a-service space is still in early innings, says the CEO of Pathward. 

Sioux Falls, South Dakota-based Pathward, which offers payments, card issuing, consumer credit, and tax solutions through its banking-as-a-service business, counts just over 30 partners, CEO Brett Pharr said. The branchless bank, a frequent partner to fintechs, had about $7.6 billion in assets as of Dec. 31, 2024. 

Pharr dubbed Pathward – formerly MetaBank – one of the “pioneers” of the BaaS space, having jumped into the payments business about two decades ago. He joined the bank in 2019, after a stint at Citizens and more than three decades at Bank of America. 

Following a recent fintech boom that brought new entrants into the space, some BaaS players are “crashing and burning,” which has contributed to regulatory pressure, Pharr in March. The 2024 collapse of fintech middleman Synapse highlighted some of the blind spots in the business model. 

“There have been such high-profile failures that particularly hurt consumers, and nobody will tolerate that,” Pharr said. While he expects some regulatory relaxation more broadly, he doesn’t think that’ll extend to the BaaS space.

Editor’s note: This interview has been edited for clarity and brevity. 

BANKING DIVE: Do you think the regulatory reckoning for BaaS is winding down, as regulators and banks have learned more about the business? 

BRETT PHARR: Some people think we’re a long way through this. I think we’re just getting started. There are topics that haven’t been hit yet. Most of the focus up to this point has been around ledgers and reconciliations, and Bank Secrecy Act/anti-money laundering. There hasn’t been a deep dive into third-party, nested third-party, fourth-party arrangements, or deep investigations into compliance topics like Regulation Z (Truth in Lending) and Regulation E (Electronic Fund Transfers). I think there’s another whole round of regulatory scrutiny that’ll continue to put pressure on the space. 

Do you expect the focus on third-party risk to remain, despite changes at bank regulatory agencies?

You’ve got to have enough integrity and confidence to know whether you’re hurting the consumer, and third-party risk management is how you do that. You’re supposed to track complaints and have a complaint management system on your partner, but newer BaaS banks did not set up a complaint management system; they don’t even know what the complaints are. It’s that kind of thing.

Some of these middleware providers, that sit between the bank and the fintech, that’s a business model that’s not going to work. Generally, we do three-party agreements, so we have line of sight. That customer that has money in my bank is my customer, because I'm the one that's providing pass-through FDIC insurance. I have to have that direct agreement.

Do you expect more banks will get in or out of BaaS?

There are banks that have gotten into this in the last three to five years, sometimes with a single product. Some will decide to get out, some will decide to invest heavily. It depends on the segment. Most of our business, early on, was based on interchange income, through swipe fees at merchants. An increasing part of the opportunity in BaaS is no longer related to interchange, and that means all banks can play, so you can have very large banks in this space, too.

More banks will get out, because they’re not able to solve the problems they want to solve, or they’re not willing to invest. We saw deals being done that made no economic sense, because they weren’t pricing in the cost of compliance. If you’re not doing that, the partner business model doesn’t work. Some of the partners are going to go out of business, too. You’ve had a first round of fintechs that have kind of washed out. We may have another round, because they can't just do customer acquisition. You actually have to make a profit. 

What kind of opportunity is Pathward seeing as banks leave the BaaS space? 

It comes in two forms. One is, a bank is getting out and somebody wants a new bank. Or, we’re seeing a lot of, I don’t want to keep all my eggs in one basket with one bank; I want to have two banks, so that they don’t get left hanging in case somebody has a problem. We’re seeing that in the payments side but also in the marketplace lending side. It’s given us some good opportunities.

Are you worried about banks losing their place in this ecosystem if more companies obtain bank charters?

History is filled with non-banks that got a bank charter and either gave them back or wished they could. I have a great partner in H&R Block; they got rid of their bank charter. You’ve got some that have bought banks for a charter. There’s a real problem when you have something bigger running the bank. Everybody that’s not a banker that gets a bank charter has no idea what it’s going to take to run that bank. Banking is a culture. 

I’m not worried about it. There will be some that obtain bank charters, no doubt. But they’ll spend an awful lot of time trying to figure out how to own a bank.

Lessons learned from the New York attorney general’s investigation, which said Pathward unlawfully froze customer accounts and transferred money to debt collectors?

It’s about third-party management. We operate as a national bank in 50 states. You have to have a specific procedure in place in each of the 50 states, and that speaks to the complexity of it. Things were missed, no doubt about it. We very quickly worked with them and resolved it. It was one partner in one state that was the problem, in one topic, which speaks to how complex third-party risk management is. 

You could be partnered across 50 states, 120 rules across different states, and you miss one. It’s going to happen in this space. The question is, what do you do about it and how do you fix it?

In a November interview with Reuters, crypto firm Ripple’s chief legal officer, Stu Alderoty, called the concept of a “skinny” master account with the Federal Reserve “an attractive idea” that “should give traditional banks some comfort.”

It remains unclear, at the time of the interview, whether he knew that traditional banks, apparently, will be the only institutions receiving them.

Fed Gov. Christopher Waller, on a panel for an event with the Bank of Canada, sought to clarify what he saw as a “misunderstanding” about the skinny accounts, which would offer tailored functionality for various tiers of institutions.

“There’s a misunderstanding out there that just a fintech can show up and say, ‘Hey, I’d like a skinny master account.’ No. You’ve got to be an eligible depository institution,” Waller said. “So it is technically, you have to have a bank charter. So if you’re not a bank, you don’t have a bank charter, you don’t have the right to ask for one at all.”

For the record, Ripple applied for a master account in July. It also applied for a national trust charter with the Office of the Comptroller of the Currency. From Waller’s comments, it can be assumed Ripple wouldn’t receive the former unless it first gets the latter.

At a payments conference in October, Waller touted “a new era for the Federal Reserve in payments.”

“The [decentralized finance] industry is not viewed with suspicion or scorn,” he said at the time. “My view for the Fed from now on is embrace the disruption — don’t avoid it.”

Waller’s November comments, however, may give the impression the disruption, if skinny master accounts become a thing, will be minimal.

“It’s going to bring new players,” he told the Ottawa event’s attendees.

But if fintechs that don’t currently hold a banking charter applied for a skinny master account thinking they’d be welcome, perhaps the initial miscommunication lies here.

Fintechs have been clamoring for direct access to the Fed’s services for years, and exploring various potential special charters. As an alternative, many have created relationships with banks in banking-as-a-service arrangements that give the nonbank companies access to Fed services.

Still, the fintechs and their trade groups have continued to push lawmakers and regulators to give them more access to the Fed’s master account services as they seek to compete with banks in some cases. Meanwhile, the banks and their trade groups have been fending off the efforts.

In October, Waller said “the payment account would be available to all institutions that are legally eligible for an account and would be beneficial for those focused primarily on payment innovations.”

Failing to expound upon legal eligibility arguably may have given some potential applicants false hope.

Observers who have followed the five-year attempt by Custodia to obtain a Fed master account, which enables approved institutions to settle transactions, hold reserves and send payments directly through the Fed’s system — rather than needing an intermediary bank for that — can sense its value.

An appeals court in October denied Custodia, a Wyoming-based special-purpose depository institution, a path to a full Fed master account (after the Fed rejected it twice).

Waller’s Ottawa comments leave in question whether state-chartered SPDIs would be eligible for the skinny version.

At the Canada event, Waller labeled the full master account “a gold medal.” But he argued that a financial system that creates tiers of banks according to risk may also benefit from a tiered master account.

“Why do we have the gold medal for everyone? In other words, why don’t we say if you’re a tier 1 bank, you get the gold medal, you get the full-service, luxury master account. If you come down a notch, you’ve got a few other issues that we’re concerned about, we can shrink the properties of the master account in terms of what you can do using that account, and the same with tier 3, you can put on more restrictions,” Waller said. “The whole idea is, why do we have just one master account? You get it or you don’t. Why not just tailor this thing to the risk of the banks that are asking for it?”

A skinny master account would give lower-tiered banks access to some of the functionality of a master account, “but it doesn’t have all the bells and whistles,” Waller said in Ottawa.

“It’s not intended to be anything but a payment account,” Waller said. “The idea is to get away from one luxury payment account for everybody that we give it to.”

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By InvestiFi

In the dynamic realm of financial services, Banking as a Service (BaaS) has emerged as a groundbreaking model, paving the way for a new era of digital banking. This model, layered with complexities yet brimming with opportunities, demands a strategic approach to partnership selection. Success hinges on choosing BaaS providers who are not merely service vendors but strategic allies, adept at navigating the multifaceted landscape of modern banking. When selecting a BaaS partner, five several crucial factors merit consideration, each playing a pivotal role in ensuring the partnership strengthens your institution's position in the market, fosters innovation and upholds regulatory compliance.

1. Strategic alignment

The importance of strategic alignment cannot be overstated. A BaaS partner should not only understand your institution's vision and goals but should also demonstrate a robust commitment to helping you achieve them. This involves a deep dive into understanding your customer base, market positioning and long-term growth ambitions. The right partner’s capabilities should align with your objectives, ensuring that their solutions effectively complement and enhance your existing service portfolio.

2. Technical integration and scalability

The cornerstone of a successful BaaS implementation lies in seamless technical integration. Your chosen partner must offer solutions that integrate effortlessly with your existing banking systems, ensuring a secure, frictionless transition that maintains continuity of service. Furthermore, scalability is paramount. As your institution grows, your BaaS provider's solutions should be capable of adapting and scaling in tandem, supporting your evolving business needs without requiring a complete overhaul of the underlying systems.

3. Regulatory compliance and risk management

In the ever-evolving landscape of financial regulation, adherence to compliance standards and effective risk management are non-negotiable. A proficient BaaS partner must not only ensure that their solutions are built within the stringent framework of current regulations but must also possess the foresight to anticipate and adapt to future regulatory changes. Their expertise in managing and mitigating risks associated with digital banking services will be imperative in safeguarding both your institution's and your customers' interests.

4. Innovation and customer experience focus

Innovation is the lifeblood of the BaaS model, driving institutions towards offering differentiated, value-added services to their customers. Your BaaS partner should be at the forefront of innovation, leveraging the latest technological advancements to enhance your service offering. At the same time, a strong focus on customer experience is vital. The ultimate goal of BaaS is to meet and exceed the expectations of the digital-savvy consumer, and your partner should embody a commitment to creating intuitive, engaging and accessible banking solutions.

5. Support and collaboration

Lastly, the journey towards digital transformation through BaaS is a collaborative endeavor. Choose a partner that offers robust support throughout the integration process and beyond. Transparent communication, responsiveness to queries and a willingness to share insights and best practices can significantly impact the success of the partnership. Your BaaS provider should be a collaborator who is invested in your success as much as their own, ready to navigate challenges together and explore innovative solutions.

Final thoughts:

The selection of a BaaS partner is a critical strategic decision that goes beyond mere technological considerations. It is about finding a collaborator who aligns with your vision, brings robust solutions to the table, mitigates risks, drives innovation and prioritizes the customer experience. As the financial landscape continues to evolve, partnering with the right BaaS provider will empower your institution to not only adapt but thrive—capturing new opportunities, streamlining operations and delivering exceptional value to your customers.

As the narrative of financial innovation unfolds, InvestiFi stands at the forefront, offering financial institutions an unparalleled partnership). With a focus on seamlessly integrating investing services into existing banking infrastructures, InvestiFi empowers institutions to navigate the complexities of the digital age with confidence. For those ready to explore how InvestiFi can transform your digital offerings and drive your institution toward a future of growth and opportunity, we invite you to learn more about our solutions by downloading an overview at InvestiFi's website.

Mercury has applied for a national bank charter with the Office of the Comptroller of the Currency, the San Francisco-based fintech announced in December.

Mercury, geared toward startups and venture capitalists, appointed Jon Auxier as the fintech’s chief banking officer and as president and CEO of the proposed bank. Auxier served as CFO of SoFi Bank, where he helped the company in its own journey toward becoming a bank. Auxier left SoFi in 2023, according to his LinkedIn profile.

“Few fintechs have reached the level of financial strength and operational discipline to pursue a charter at this scale,” Auxier said in a news release. “Mercury is profitable and has built a strong balance sheet with a scaled and successful business. Becoming a bank will build upon our strong foundation and let us innovate with more precision and accountability.”

Auxier also served as SoFi Technologies’ corporate treasurer and, earlier in his career, held senior roles at Green Dot and Goldman Sachs.

“Together, we are committed to building a bank that is as strong and enduring as it is innovative – a bank our customers can trust to keep their money safe and to help them build for generations,” Auxier wrote in a LinkedIn post.

Mercury’s application comes as a number of fintechs – particularly in the crypto sector – have been approved by the OCC for national trust bank charters. The move also comes days after PayPal applied to open a Utah-chartered industrial loan company. The OCC and Federal Deposit Insurance Corp. also recently approved de novo applications for Erebor Bank.

As part of its process, Mercury is applying for deposit insurance with the FDIC and will apply to the Federal Reserve to become a financial holding company, the fintech said.

“Becoming an FDIC-insured national bank aligns with our long-term vision and will allow Mercury to deliver a better customer experience at scale,” Mercury CEO Immad Akhund said. “We’ve built Mercury for ambitious companies and individuals. Once we receive regulatory approval, a charter will let us deliver greater stability, long-term confidence and trust, while continuing to redefine what radically different banking means.”

In recent times, Mercury has made quick maneuvers to catch new business – launching new features for venture capitalists to meet growing demand from former customers of Silicon Valley Bank when that lender failed.

Mercury also previously worked with banking-as-a-service provider Synapse, particularly connecting the now-bankrupt firm to its banking partner, Evolve. Mercury and Evolve cut ties in March.

Tim Mayopoulos, the former CEO of Fannie Mae who now serves as a Mercury board member, said the fintech’s decision to apply for a national bank charter “shows how innovation and oversight can reinforce one another — strengthening confidence in the system and expanding access to modern, technology-driven banking.”

“Fintechs have become vital to how small businesses and entrepreneurs access the financial system,” Mayopoulos said.

Fintech Enova International has agreed to buy Grasshopper Bancorp and its digital bank subsidiary, Grasshopper Bank, for $369 million in cash and stock, the companies said in December.

Pairing Chicago-based Enova’s online lending platform with Grasshopper’s national bank charter and deposit-gathering capabilities will allow the combined company to access to more consumers and small businesses, “who have traditionally been underserved by banks,” Enova CEO David Fisher said during a conference call to discuss the deal.

The transaction, subject to Grasshopper stockholder approval and regulatory green lights from the Office of the Comptroller of the Currency and the Federal Reserve, is projected to close during the second half of 2026. 

Nonbank online lender Enova has made about $65 billion in loans to consumers and small businesses since 2004, according to an investor presentation. It has reportedly been pursuing a bank charter since at least 2020.

“Acquiring a bank has been an aspiration of ours for a long time, and we believe we have found the perfect partner and we believe now is the perfect time to move forward with this important, strategic step,” Fisher said during the call. 

Digital bank Grasshopper, founded in 2019 and based in New York City, has about $1.4 billion in assets and caters to both businesses and consumers with banking-as-a-service, commercial and Small Business Administration lending, and consumer banking services. Last year, Grasshopper acquired Dearborn, Michigan-based Auto Club Trust.

“By simplifying our product and operational model under this charter, we believe there are significant opportunities to accelerate the growth of our existing products with enhanced ability to serve customers in more states, as well as an ability to expand into new, complementary products,” Fisher said during the call.

Under the deal’s terms, Enova shareholders will own about 95% of the combined company and Grasshopper investors will own about 5%. 

“We're thrilled to join forces with Enova, a market leader in digital lending and a true innovator in the use of technology and analytics in the financial services sector,” Grasshopper CEO Mike Butler said. “This combination of enhanced digital lending and banking will enable us to serve an even broader set of customers while expanding and strengthening the product offerings for our current clients.”

Steve Cunningham, set to become Enova CEO Jan. 1 as Fisher steps back, will also become CEO of Grasshopper Bank. Butler will become president of the bank, reporting to Cunningham. Grasshopper management will stay on as bank employees, according to the investor presentation. Fisher, meanwhile, will become executive chairman of the board. 

Enova will become a Fed-regulated bank holding company, while Grasshopper will retain its national bank charter.

For a fintech company, “having the bank charter just avoids having to go through all the different state licensing procedures,” said Joe Silvia, a Chicago-based partner at law firm Duane Morris. “It’s not a one-stop shop, but it's a lot easier than getting 49, 50, 51 different licenses.” 

With non-traditional acquisitions like a fintech acquiring a bank, maintaining certain bank staff or executive leadership can benefit the regulatory application process, assuming the bank was in good standing with regulators, Silvia noted. 

“Part of the application process is, ‘who’s running this institution after the deal closes and do they have any experience in banking? Because if they don’t, then we’re not going to be approving this,’” he said. 

The deal’s price-to-tangible book value ratio is 2.54. The transaction is expected to generate about 15% accretion to adjusted earnings per share within the first year and about 25% “once the synergies are fully realized beyond the first year,” Enova said. 

Enova reported $2.3 billion in revenue and $229.4 million in net income for the first nine months of 2025, according to its third-quarter regulatory filing. 

Fintech chartering activity has been muted in recent years, but a “reopening of the regulatory gates” for fintechs and nonbanks has been expected given new leaders atop regulatory agencies. In March, fintech SmartBiz received regulatory approval to acquire Northbrook, Illinois-based United Community Bancshares and its subsidiary, Centrust Bank.

Thread Bank’s new chief digital officer is focused on practical problem-solving by identifying business challenges and time-consuming processes that could be streamlined by artificial intelligence.

Marty Miracle, hired in August, is Thread Bank’s first chief digital officer and he prefers a more centralized AI approach with a unified platform, rather than individual solutions.

“We don't want 30 different vendors doing 30 different AI things,” Miracle said. “If we can have a plan where we can have AI tailored to solve the business problems, we may be better off.” Thread Bank CEO Chris Black joined Miracle during the interview.

The Nashville, Tennessee-based community bank has roughly $797 million in assets and serves the eastern part of the state.

The lender’s move to hire a digital chief aligns with its long-term goal to focus on strategic partnerships instead of maintaining “teams and teams of engineers” and building technology in-house, Black chimed in.

The lender partners with software providers, emphasizing implementing external capabilities in compliant and regulatory-appropriate ways and using partnerships to deliver banking products and services through various channels, Black noted.

Though this strategy reduces development complexities, it creates integration challenges that require coordination between internal teams and external partners, and demands strong data strategies and governance to maintain compliance, according to Black.

Miracle’s expertise in integrating different technology systems and components while implementing an effective data strategy and governance is crucial for the bank, Black pointed out.

“He's got a lot of embedded banking experience,” Black said. “These are all things that have been on our roadmap and in vision on the journey that we've been doing. But Marty's got an ability to help us pull them together and integrate more tightly.”

Thread Bank delivers embedded financial services, including deposits, lending, acquiring and payments. 

The bank's first dedicated CDO position consolidates functions that were previously handled by separate roles, including the chief technology officer and chief information security officer, Black said. Miracle’s role will focus specifically on digital banking initiatives, embedded banking solutions, innovation leadership and bringing together previously fragmented digital strategies as the lender aims to scale.

Prior to joining Thread Bank, Miracle served as the chief technology officer and chief information security officer at Sutton Bank. He plans to build out necessary teams and bring on board the required skills and expertise to support Thread Bank’s digital transformation. 

In May 2024, the Federal Deposit Insurance Corp. issued a consent order that called out Thread Bank’s banking-as-a-service business and ordered the lender to ensure its third-party risk management program addresses the risk and complexity level of fintech partners in its BaaS program.

Despite regulatory challenges, the lender has continued to operate and execute its business plan without significant disruption, Black said.

Thread Bank has worked closely with the FDIC, positioning itself as “part of the solution, not the problem” with the consent order process. The bank has also created a platform for showcasing innovative ideas to regulators and sought to develop stronger relationships with regulatory bodies, Black noted.

Black called the consent order a “positive experience,” adding that Miracle’s joining the company at this point is fortuitous. 

“We were looking for a person who had Marty's experience and skill sets all along and found them at a good time as we're building for scale and for the next long period of time,” Black said. 

Miracle stressed that companies can be innovative while still maintaining disciplined implementation processes that satisfy regulatory requirements and minimize risk.

Regulators “are very clear on things they want you to have in place in order to deliver,” Miracle said. “If you're an innovative company, the delivery of those things has to be organized, demonstrate maturity on having the right checks and balances around you, so that you don't go on and try to do something that might put yourself at risk for other things.”

Banking-as-a-service startup Solid Financial Technologies filed for Chapter 11 bankruptcy protection and restructuring in a Delaware court in April, following a challenging few years.

Solid has used equity funding to raise capital for operations But since the last fund-raise in July 2022, the fintech “has not been able to successfully raise additional funds and has faced significant and costly litigation,” the company’s CEO and co-founder, Arjun Thyagarajan, wrote in the filing.

A lawsuit filed by Solid investor FTV Capital in the Delaware Court of Chancery claimed, among other things, that Thyagarajan and co-founder Raghav Lal deceived FTV regarding Solid’s “revenues, customer churn, and business generally,” TechCrunch reported in October 2023.

FTV also claimed that both co-founders concealed what they were doing and sent a cease-and-desist letter to their head of finance, who FTV said was sharing information with the firm. 

As of the bankruptcy filing date, Solid has roughly $760,000 in unsecured trade debt with a limited amount of current revenue, and roughly $7 million in cash on hand, of which roughly $2 million is held in nonliquid reserve accounts.

Through the Chapter 11 case, Solid aims to cut down the legal expenditures that have “grown significantly after the FTV litigation,” sell the fintech’s valuable assets – its application programming interface – and create a Chapter 11 plan after a sale process, the court document said.

“After considering all options, we’ve decided that a voluntary Chapter 11 restructuring is the best course,” Thyagarajan told TechCrunch, expressing optimism that the court-supervised sale process would attract an appropriate buyer, resulting in favorable outcomes for the company, its customers, and shareholders. 

Solid plans to maintain normal business operations throughout this restructuring process, he said.

Challenges in the bank-fintech space

Solid’s bankruptcy filing comes roughly a year after middleware fintech provider Synapse filed for bankruptcy in April 2024. After Synapse’s bankruptcy, roughly $85 million in customer funds were missing. 

Since then, the bank-fintech partnership space has come under heightened scrutiny. In a recent letter, Sen. Elizabeth Warren, D-MA, pressed Michelle Bowman, the nominee for the Federal Reserve’s vice chair for supervision, on why the central bank “failed to prevent the disastrous blow-up” of Evolve Bank & Trust’s partnership with Synapse that led to the missing funds. Coincidentally, Evolve was also Solid's bank partner from 2021 to 2023. Since Synapse’s collapse, Evolve has been hit with an enforcement action and lawsuits, and has seen fintech partners pivot to other banks. 

Solid plans to use cash on hand to facilitate its bankruptcy and believes its case and the marketing process will help sell its assets to the highest bidder, Thyagarajan said.

The fintech decided to pursue Subchapter V because it imposes shorter deadlines for filing reorganization plans, grants greater flexibility in negotiating restructuring plans, and does not require the payment of U.S. trustee quarterly fees, according to a Justice Department webpage.

Solid did not immediately respond to a request for comment. 

Solid’s decision was driven by regulatory shifts after the collapse in the cryptocurrency space that rendered the BaaS model and partnerships with banks “unsustainable”; the fraud allegations brought by FTV and a settlement that drained the fintech’s balance sheet; and the fintech’s inability to retain clients and key employees amid declining revenue and limited growth opportunities, according to the court document.

“There are challenges in the aggregator space that likely didn't allow Solid to find a permanent partner bank and unfortunately their bankruptcy is a result of that,” Bob Hartheimer, a senior adviser at Klaros Group, said via email. “What this means is the bar has been raised not only for partner banks but also for third party providers such as aggregators, compliance, and risk management providers to the partner bank fintech ecosystem.”

Solid has raised roughly $81 million in venture capital over three funding rounds, including $63 million in August 2022, led by FTV Capital and Headline. 

“Solid offers modern fintech infrastructure” and helps any company “become a fintech company by building on Solid,” Thyagarajan said at the time, dubbing his company the “AWS of fintech.” 

Nearly a year after the fund-raise, FTV sued Solid over alleged breach of contract, fraud in the inducement, fraudulent concealment, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing and unjust enrichment. 

Solid disputed the allegations, and the FTV litigation was dismissed with prejudice under a settlement.

Impact of the litigation

The allegations by FTV hampered Solid’s relationship with its partner bank, Lewis & Clark Bank. In the fall of 2023, the bank required the fintech to fund a $10 million security reserve and to abide by additional reporting requirements. However, the court document pointed out that the bank terminated the master services agreement between both companies in August 2024.

Solid had four active clients with the bank, as of April, and that partnership was scheduled to end May 31.

The startup has been “involved with several governmental investigations and inquiries, cooperating fully with each respective governmental entity, including by providing requested documents,” the filing noted.

Solid worked with 142 clients between its founding and the end of 2024. During that time, it maintained banking relationships with BBVA (2019-2020), Evolve, Citizens Bank of Weir (2022-2024, card issuance only) and Lewis & Clark Bank, the filing said.

No new client contracts were signed in 2025, and Solid experienced the most significant client departures in late 2023 and early 2024, the filing said. 

Solid counted three staff members in April – the CEO, the president and the chief product officer – along with one independent contractor, the company’s former finance director. That compares with 23 employees in 2023. 

Synapse Financial Technologies allegedly violated consumer protection laws by failing to keep proper track of consumers’ funds, and failing to ensure the records they kept matched those of partner banks, according to charges by the Consumer Financial Protection Bureau.

The regulator filed a lawsuit against Synapse in August, 16 months after Synapse’s bankruptcy exposed a multimillion-dollar shortfall of funds between fintech user accounts and the banks Synapse connected them to.

“Consumers were substantially injured by Synapse’s acts,” according to the lawsuit. “Consumers did not have any access to their money for weeks or months as Partner Banks reconciled their records with Synapse’s records and then distributed funds to consumers. Many consumers have not received the full amount of their account balance with their FinTech Platform.”

In a stipulated judgment and order entered concurrently in the Synapse bankruptcy case Aug. 21, the CFPB proposed a $1 civil money penalty enabling it to access the civil penalty fund to redress harm to customers, such as users of affected fintechs Yotta, Copper and Juno. As of September 2024, the CFPB civil penalty fund had more than $118 million in unallocated funds available for victim relief.

“It’s encouraging to see the Consumer Financial Protection Bureau take decisive action to prioritize consumers in this case,” Sam Mesquita, a Yotta customer whose funds remain tied up, told Banking Dive via text.

“Their persistence offers hope that impacted individuals will see some resolution, and it sends an important message that banks and fintechs will be held accountable for practices that misled people into believing their money was fully protected – at a time when access to savings is essential,” Mesquita said.

The CFPB using its fund to pay end users “would be a better outcome for claimants than continuing to search for someone to take the blame on their own,” Todd Baker, a senior fellow at the Richard Paul Richman Center for Business, Law, and Public Policy at Columbia Business and Law Schools, told American Banker when plans for the lawsuit were announced.

“Without this, they would likely get nothing from the bankruptcy process, as there is no money left in Synapse to finance further efforts at recovery,” Baker said.

The proposed final judgment also provides for injunctive relief and prohibits Synapse’s sale of customer information.

The CFPB has repaid consumers who’ve been harmed by fintechs before, including $384 million to 191,000 victims of Think Finance’s illegal lending practices in 2024. The company had tricked them into repaying loans they didn’t owe.

Jelena McWilliams, Synapse’s court-appointed Chapter 11 bankruptcy trustee, asked that the court enter the stipulated judgment and order by September. Missing that deadline would mean end users may have to wait an additional six months for the funds to be allocated, according to the civil penalty fund’s allocation schedule.

Neither the CFPB nor Synapse founder Sankaet Pathak responded to requests for comment.

The Office of the Comptroller of the Currency conditionally approved five digital asset firms, including Circle, Ripple and Paxos, for de novo national trust bank charters, the regulator announced in December.

Circle’s First National Digital Currency Bank and Ripple National Trust Bank were conditionally approved for national trust charters, while Paxos Trust Co., BitGo Bank & Trust and Fidelity Digital Assets’ state charters will be converted to national ones.

“Paxos is now entering a new phase of regulatory supervision and we’re excited to power a platform subject to federal oversight and supervision,” CEO Charles Cascarilla said in a statement. “This will enable customers to innovate, incubate and grow digital asset businesses safely and seamlessly within the US.”

Circle CEO Jeremy Allaire said the charter move “deepens” his firm’s “longstanding commitment to the highest standards of trust and compliance.

“This important milestone will give the world’s leading institutions greater clarity and confidence to build on Circle’s platform as stablecoins and blockchain technology move rapidly into the mainstream,” Allaire said in a statement. “As a public company, we’re focused on operating under rigorous regulatory oversight and building the infrastructure that allows digital dollars like USDC to become a core part of global finance.”

The OCC, for its part, said it “applied the same rigorous review and standards it applies to all charter applications.”

“New entrants into the federal banking sector are good for consumers, the banking industry and the economy,” Comptroller of the Currency Jonathan Gould said in a statement. “They provide access to new products, services and sources of credit to consumers, and ensure a dynamic, competitive and diverse banking system.”

In a December speech to the Blockchain Association, Gould said the OCC has allowed national trusts to engage in nonfiduciary custody activity for decades, adding that prohibiting them from engaging in such activities would “not only threaten to undermine the dynamic and evolving nature of the federal banking system but would also disrupt well over a trillion dollars in traditional activities of existing national trust banks.”

“Custody and safekeeping services have been happening electronically for decades,” Gould said. “There is simply no justification for considering digital assets differently.”

The five firms will join the ranks of 60 already-established national trust banks. Not every high-profile cryptocurrency-related charter application saw approval, though. Coinbase’s application and that of Stripe subsidiary Bridge were not among those approved.

Gould and Federal Deposit Insurance Corp. Acting Chair Travis Hill have vocally advocated for new bank charters.

Anchorage Digital, previously the only other crypto firm to receive OCC approval for a national trust bank, lauded its new contemporaries.

“Anchorage Digital Bank became the first federally chartered crypto bank in January 2021 — and we never wanted to be the last. This is long overdue,” CEO Nathan McCauley said in a release seen by Banking Dive. “With a nearly five-year head start — and immense investment in compliance along the way — Anchorage Digital Bank has pioneered a path for others to follow.”

Not everyone is as enthused over the charter news. Greg Baer, CEO of the Bank Policy Institute, a trade group, said the development “leaves substantial unanswered questions … chiefly, whether the requirements the OCC has outlined for the applicants are appropriately tailored to the activities and risks in which the trust will engage.”

“We hope the OCC will share more details about these applications so the public can better understand the rationale behind today’s decision,” Baer said.

Ripple CEO Brad Garlinghouse decried “anti-innovation bank lobbyists” in a statement.

“The conditional approval of our trust bank charter represents a massive step forward –setting the highest standard for stablecoin compliance with both federal and state oversight … ensuring [the firm’s token] is the most transparent and responsibly managed stablecoin in the market today,” Garlinghouse said.

Green Dot has partnered with Crypto.com to provide money management services for Crypto.com’s customers, the companies said in May.

Using Green Dot’s embedded finance platform, Arc, Crypto.com customers will be able convert their digital assets to fiat currency and vice versa, allowing them to access funds at Green Dot locations nationwide and earn interest, according to a press release.

Crypto.com is also introducing an interest-earning savings account. The company plans to add more features to the account in the future, per the release.

Crypto.com continues to align itself with traditional finance through its partnership with established financial services firms. In 2021, Visa teamed up with the digital currency platform on a pilot program that settles transactions using digital stablecoins through Ethereum, the crypto blockchain. 

The following year, Singapore-based Crypto.com collaborated with Fidelity National Information Services and its Worldpay unit to facilitate its card-based cryptocurrency sales and purchases for the platform. 

Crypto.com’s partnership with Provo, Utah-based Green Dot provides crypto customers with a pathway to buy digital currencies using in-store access points, the release noted. Green Dot has cash deposit and withdrawal kiosks at more than 95,000 retail locations nationally, including in retail stores such as Walgreens, Walmart, 7-Eleven and CVS, according to the press release. 

“We are thrilled to partner with Crypto.com to enhance the customer experience for their millions of users in the U.S. with more seamless and affordable means of buying and selling cryptocurrencies,” Renata Caine, general manager and senior vice president of embedded finance at Green Dot, said in the statement, calling Crypto.com “a trailblazer in safely and securely advancing the adoption of cryptocurrency in the U.S.”

Green Dot’s crypto partnership follows the embedded finance company’s decision to explore a possible sale.

(Indeed, Green Dot entered into acquisition agreements with Smith Ventures and CommerceOne Financial Corp. in November, with the private equity firm acquiring Green Dot’s nonbank fintech business, and the parent company of CommerceOne Bank acquiring its Green Dot Bank assets.)