Robinhood is pulling its bank charter application with the Office of the Comptroller of the Currency (OCC), highlighting the difficulties that tech startups experience when they try to enter the banking industry.
A Robinhood spokesperson told CNBC that the withdrawal was voluntary. “Robinhood will continue to focus on increasing participation in the financial system and challenging the industry to better serve everyone,” the spokesperson said. “We appreciate the efforts and collaboration of all the parties we worked with throughout this process.”
Founded in 2013, the California-based company offers commission-free stock and cryptocurrency trading. It is also set to launch a cash management account after its 2018 checking and savings product with a 3% interest rate failed amid the regulatory outcry.
Even though the spokesperson claimed Robinhood is voluntarily withdrawing its application, the company’s unsuccessful attempt to become a bank shows how tech companies still have a long way to go before fully passing regulatory muster.
Other companies have encountered similar problems. Social Finance, for example, also withdrew its bank application. Jack Dorsey’s Square Inc. is still waiting for the result of its bid and has met resistance from local politicians.