Bank Charter
A bank charter is the authorisation that makes an institution a bank — granted in the United States either by a state banking department or by the federal Office of the Comptroller of the Currency. Deposit insurance and access to Federal Reserve services are separate approvals, not things the charter brings with it.
Also called: state charter · national charter
The United States runs a dual banking system. A bank may be chartered by the banking department of a state, or nationally by the Office of the Comptroller of the Currency, which has exclusive authority to issue a national bank charter. The choice determines the primary regulator, the powers the institution has, and much of the examination regime it lives under.
What the charter does not do is bundle everything else a bank needs. Federal deposit insurance is a separate application to the FDIC, decided on its own criteria; the FDIC’s own guidance for organisers describes obtaining the charter and obtaining insurance as two approvals, which may be filed concurrently but are granted separately. Membership of the Federal Reserve System is a third question, which is what makes a state bank a “state member” or “state nonmember” bank. And an account at a Reserve Bank is a fourth: the Tenth Circuit held in 2026 that a Reserve Bank may decline a master account to an institution that is statutorily eligible for one, so eligibility and access are not the same thing.
For a fintech the practical consequence is the one that matters. Offering deposit accounts, cards or payments through a partner bank under a banking-as-a-service arrangement uses somebody else’s charter. The permission, the insured deposits and the regulatory responsibility stay with the bank.
In practice
A charter is not a package. It does not automatically bring FDIC insurance, Federal Reserve membership or a master account, and each of those has been refused to chartered institutions. Equally, a firm operating through a sponsor bank has no charter of its own, however the product is branded to its customers.
Example
A Wyoming SPDI holds a state bank charter, is prohibited from lending its fiat deposits, is not required to carry FDIC insurance, and has no automatic right to a Federal Reserve master account. It is a chartered bank on every one of those facts.
Commonly confused with
| Term | How it differs |
|---|---|
| Banking-as-a-Service | BaaS is how a firm uses a chartered bank's permissions. It confers no charter on the firm, and the bank keeps the regulatory responsibility. |
| Special Purpose Depository Institution | An SPDI is one kind of state bank charter — Wyoming's — with restricted powers. It is not a national charter. |
| Money Transmitter License | A money transmitter licence permits the movement of customer funds. It does not permit deposit-taking, which is what a charter is for. |
See also
- Special Purpose Depository InstitutionA Special Purpose Depository Institution is a Wyoming state bank charter for institutions that take deposits and custody digital assets without lending out customer fiat. It is a bank charter with restricted powers — not a national charter, not automatically FDIC-insured, and with no guaranteed Federal Reserve access.
- Banking-as-a-ServiceBanking-as-a-Service is an arrangement in which a licensed bank makes its accounts, payments and cards available to a non-bank company, which builds the customer-facing product. The bank keeps the charter, the insured deposits and the regulatory responsibility.
- Sponsor BankA sponsor bank is a regulated bank that lets a non-bank reach accounts, payment rails or card networks under the bank’s own charter and permissions. The program runs on the bank’s authority, and the bank stays answerable for what happens on it.
- Master AccountA master account is an account held directly at a Federal Reserve Bank. It gives its holder settlement in central bank money and direct access to US payment systems, instead of reaching them through a commercial bank that holds an account on its behalf.
- Money Transmitter LicenseA money transmitter license is permission granted by a US state for a company to receive money from the public in that state and pay it, or its value, to someone else. Each state licenses separately.