Dive Brief:

• Figure Technologies, a fintech founded by former SoFi CEO Mike Cagney, applied for a national bank charter through the Office of the Comptroller of the Currency (OCC), the company announced Friday.
• The company is focused on issuing home equity lines of credit on a private blockchain network, the Provenance platform. But it also plans to pilot a small-dollar installment-loan product in January through either credit lines or point-of-sale offerings built on blockchain, Cagney told Bloomberg. The product is meant to target the unbanked or consumers whose credit histories are limited.
• Figure has 96 licenses in 49 states, Coindesk reported. "We'll have over 200 state licenses next year without such a charter," Cagney said in a press release. Consolidating Figure's compliance efforts to align to one regulator would cut costs and allow the company to market a wider set of consumer products nationwide, Cagney said.

Dive Insight:

Figure's application comes little more than a week after Cagney's previous company, SoFi, received preliminary conditional approval for a charter with the OCC.

A number of fintechs have sought national charters in recent years, though not all through the OCC. Varo became the first challenger bank to get its charter with the regulator in July, and Britain's Monzo submitted a de novo application with the OCC in April.

But several others have gone to the Federal Deposit Insurance Corp. (FDIC) for an industrial loan company (ILC) charter — the route of choice for payments company Square and student loan servicer Nelnet, which were approved in March. Investment company Edward Jones applied for an ILC charter in July. And Japanese e-commerce giant Rakuten has submitted and withdrawn two applications that way.

Still other fintechs, such as LendingClub and Jiko, have bought banks to obtain charters.

Cagney tried to get SoFi an ILC charter in 2017, but the company withdrew its applications after Cagney resigned amid sexual harassment allegations made by two former SoFi employees, according to CNBC.

"There could be some pushback, as the industry is somewhat mixed on it," Cagney told Bloomberg, of Figure's attempt to obtain a charter. "But our idea is that we generate consistent assets at a lower cost, which would be good for the broader banking system."

The OCC and New York's Department of Financial Services are embroiled in a legal battle over the former's special-purpose fintech charter. Lawmakers and trade groups, meanwhile, have raised concerns over a "loophole" that they say lets companies avoid Federal Reserve oversight.

"The Rakutens and the Googles of the world shouldn't be able to circumvent the Fed," said Sen. John Kennedy, R-LA. "If they're allowed to handle your banking services, they're going to turn into continents."

Figure has originated more than $1 billion in home equity lines of credit since its establishment in 2018.

The OCC declined to comment to Bloomberg regarding the application.