Wise tumbles after US declines national trust bank application

• The Office of the Comptroller of the Currency rejected Wise's application as the Federal Reserve paused account access for uninsured trust banks under new payment system policies
• Wise plans to resubmit a new application for a national trust bank charter focusing on digital assets like stablecoins
• Regulators flagged a 2023 U.S. consent order on compliance violations, though Wise says it has since strengthened its safety processes

Summary

Market Impact: London-listed Wise (WISEa.L) shares plunged 10% on Friday following the U.S. Office of the Comptroller of the Currency's (OCC) rejection of its national trust bank charter application.

Key Development: The OCC denied Wise's application, citing incompatibility with new Federal Reserve policies governing payment system access. The money transfer company had sought the charter to settle U.S. dollar payments directly with the Fed, which would have enhanced its operational capabilities in the American market.

Regulatory Changes: U.S. payment regulations have undergone significant changes since Wise submitted its application in June of last year. The Federal Reserve has generally paused account access for uninsured trust banks, rendering Wise's original approach "non-viable."

Compliance Issues: Regulators also referenced a U.S. consent order from last year related to compliance violations. Wise stated it has since strengthened its safety processes in response.

Next Steps: The fintech firm plans to resubmit a new application for a national trust bank charter, this time under regulations pertaining to digital assets and stablecoins. Wise emphasized that its infrastructure is well-positioned to integrate digital assets alongside existing payment rails, suggesting a strategic pivot toward cryptocurrency-related services.

Sector Implications: The rejection highlights increased regulatory scrutiny in the fintech sector and evolving Fed policies around payment system access. Wise's shift toward digital asset-focused banking regulations signals potential industry trends as traditional payment companies adapt to changing regulatory landscapes and emerging cryptocurrency opportunities.