WASHINGTON — The financial services startup Robinhood said Wednesday that it was withdrawing its application for a federal banking charter, the latest in a string of setbacks for the fintech industry as it wrestles with regulatory compliance.
“This is not a change in our road map for getting products to consumers,” a Robinhood spokesperson said. “We’re going to continue to quickly and thoughtfully develop the financial services we offer and bring value back to customers.”
The spokesperson added that Robinhood has “no plans at this time” to pursue any other kind of banking charter. The spokesperson also said that Robinhood was not asked by regulators to withdraw its application.
In April, Robinhood applied for a full-fledged national banking charter with the Office of the Comptroller of the Currency, as opposed to the OCC's fledgling special-purpose fintech charter. The latter does not require an institution to apply for deposit insurance.
The withdrawal of the bank application was reported earlier on Wednesday by CNBC.
Robinhood filed the OCC application after angering bankers and regulators last year over a plan to offer a consumer account feature that the company claimed was insured by the Securities Investor Protection Corp.
When the SIPC refuted that, Robinhood scrambled and rebranded the product as a "cash management" service. In October, Robinhood announced that it would provide Federal Deposit Insurance Corp. backing by moving customers' uninvested funds into existing banks.
Wednesday’s announcement, however, is a poor omen for fintech firms trying to explore federal chartering options.
No company has yet filed for the OCC's special-purpose fintech charter, and a number of firms are still awaiting FDIC approval to charter industrial loan companies.