Crypto, start-ups and banking make a scary mix

The tech bros are eyeing the world of banking. The failure of Silicon Valley Bank should serve as a cautionary tale.

- Paul J. Davies

The next must-have accessory for crypto and tech bros looks to be far less sexy than a Lamborghini—it's a banking licence. Getting approved is typically time-consuming, bureaucratic and dull, but these budding lenders are likely to find themselves pushing on an open door—and that poses dangers.

Stablecoin issuer Circle Internet Group and tech billionaire Peter Thiel are among the names linked with trust bank charter applications in recent days.

The backdrop to this is a White House pushing for regulators to help innovation and growth in the economy and finance. Some of that is down to the backing US President Donald Trump got from Silicon Valley billionaires and crypto moguls in 2024's US presidential race, plus his personal financial interests in memecoins and digital assets.

But it is also down to frustrations with a long drought in new bank formations since the financial crisis of 2008.

Before that, many years had seen 100 to 200 new banks each, according to the Federal Deposit Insurance Corp. Since then, most years have barely seen 10 or 15 lenders open for business.

Ultra-low rates have made simple banking less profitable, but campaigners for small banks also blame heavy-handed regulation and tough capital rules.

Ms Michelle Bowman, the Trump-appointed chief regulator at the US Federal Reserve, has spoken often about this dearth of new banks and promised to bring back more tailoring of supervision and regulation to make life easier for small banks.