In a significant strategic shift, global payments giant PayPal has formally applied to establish a federally regulated bank in the United States. The move positions the fintech leader to capitalise on a wave of deregulation championed by President Donald Trump's administration.
The Application and Strategic Ambition
On Monday 16 December 2025, PayPal confirmed it had submitted applications to both the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC). The goal is to form a new entity named PayPal Bank.
Alex Chriss, the firm's president and chief executive, stated that securing a banking charter would significantly enhance its capacity to lend to small businesses. He highlighted that access to capital remains a major barrier for growth. Since 2013, PayPal has provided over $30 billion in loans and working capital to business account holders.
Riding the Wave of US Deregulation
PayPal is not acting alone. It follows in the footsteps of other major fintech players, including Brazilian digital bank Nubank and cryptocurrency exchange Coinbase, which lodged similar applications earlier in the year. This collective push is a direct response to the Trump administration's agenda of rolling back financial rules.
The reforms have primarily targeted the post-financial crisis Dodd-Frank Act of 2010 and the Consumer Protection Act. Key changes include:
- Raising the asset threshold for stricter prudential standards from $50 billion to $250 billion, exempting many mid-sized firms.
- Easing the 'Volcker Rule' restrictions on speculative investments for banks with assets under $10 billion.
John Cronin, a banking analyst at Seapoint Insights, commented, "The Trump administration’s deregulatory agenda and its openness to granting bank charters is beginning to make the US banking market more accessible and competitive."
UK Fintechs Look Across the Atlantic
The shifting regulatory landscape in America has caught the attention of Britain's fintech sector. Major UK players like Revolut, Clearbank, and Starling are reportedly exploring plans to acquire nationally chartered US banks. This acquisition route is seen as a faster method to obtain a licence that permits lending across all 50 states.
Declan Ferguson, Starling's chief financial officer, has indicated the firm is "inclined towards acquisition" for this reason. However, analyst John Cronin warned that while the US market is more attractive, the licensing process will remain "highly stringent" for overseas firms without an established local presence.
Contrast with UK Regulatory Efforts
Meanwhile, in the United Kingdom, the Labour government is pursuing its own regulatory overhaul for the City of London. Chancellor Rachel Reeves announced the 'Leeds Reforms' package in July, aiming to "rewire" financial services. Yet, critics argue these efforts have so far failed to significantly boost growth.
In a separate move, the UK's banking watchdog identified 37 individual reporting templates for potential removal in September. Consolidating rules and deleting these templates is projected to save banks approximately £26 million annually in administrative costs.
The global fintech race is intensifying, with regulatory environments on both sides of the Atlantic becoming key battlegrounds for market access and competitive advantage.
