Block Seeks Banking License to Launch Bitcoin Custody Service

Block emphasized that the charter would not involve lending or traditional deposit-taking activities

Jack Dorsey’s financial technology company Block has applied for a federal banking charter to establish a new institution focused on bitcoin services. The application, submitted in early September, aims to create Builders Bank, which would offer custody and fiduciary services for bitcoin holdings. Block, known for its Cash App and Square platforms, says the move supports its goal of expanding access to bitcoin through regulated financial infrastructure. The company states that Builders Bank would operate as a special purpose depository institution, allowing it to hold bitcoin on behalf of customers while complying with federal banking regulations. This structure would enable Block to provide secure storage, transaction settlement, and related fiduciary services typically offered by traditional banks but tailored to digital assets.

Block emphasized that the charter would not involve lending or traditional deposit-taking activities, focusing instead on safeguarding bitcoin assets. How Builders Bank Differs from Traditional Crypto Custody Providers Unlike many existing crypto custody services that operate under state trust charters or as limited purpose institutions, Builders Bank would seek full federal recognition as a bank. This could provide greater interoperability with the broader financial system, including access to Federal Reserve services and clearer regulatory oversight. Block argues that a federal charter would enhance customer trust and allow for more seamless integration between bitcoin holdings and conventional financial tools like payments and payroll. What Regulatory Hurdles Might Block Face in Securing Approval? Obtaining a federal banking license is a rigorous process that requires demonstrating financial stability, robust risk management, and compliance with anti-money laundering and know-your-customer rules.

Regulators may scrutinize Block’s plan due to the novel nature of holding bitcoin as a core asset class

Regulators may scrutinize Block’s plan due to the novel nature of holding bitcoin as a core asset class, particularly given ongoing debates about how digital assets should be treated under banking law. If approved, Builders Bank could become one of the first federally chartered institutions in the U. S. designed specifically to serve bitcoin users with bank-like protections. Block says the initiative aligns with its broader mission to increase economic access through technology. Industry observers note that success could encourage other bitcoin-focused firms to pursue similar charters, potentially reshaping how digital assets are integrated into the regulated financial system. Frequently Asked Questions What services would Builders Bank offer?

Builders Bank would provide custody and fiduciary services for bitcoin, including secure storage and transaction settlement, without engaging in traditional lending or deposit-taking activities. Why is Block seeking a federal charter instead of a state license? A federal charter would allow Builders Bank to operate nationwide with access to Federal Reserve services and consistent regulatory oversight, which Block says enhances trust and interoperability. How does this apply differ from Block’s current bitcoin offerings? While Block already allows bitcoin purchases and storage through Cash App, Builders Bank would operate as a regulated bank offering formal custody protections under federal banking supervision.