Wise Shares Fall 10% After US Regulators Deny National Trust Bank Application

Shares of Wise PLC plunged after U.S. regulators denied the financial technology firm's application to establish a national trust bank, a significant setback in its efforts to gain direct access to the Federal Reserve's payment systems.

Regulatory Setback and Market Reaction

London-listed shares of Wise fell as much as 10% on Friday following the announcement. The company disclosed that the U.S. Office of the Comptroller of the Currency (OCC) had rejected its application, which was initially filed in June of the previous year.

By establishing a national trust bank, Wise aimed to settle U.S. dollar payments directly with the Federal Reserve. This would have allowed the company to bypass intermediary banks, potentially lowering costs and increasing the speed of its U.S. dollar transfers.

Evolving Policy Landscape

According to a statement from Wise, the OCC's decision was based on the application's incompatibility with new Federal Reserve policies for payment system access. The company noted that U.S. payment regulations have changed significantly since it first applied.

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"With the Federal Reserve generally pausing account access for an uninsured trust bank, the approach in our application became non-viable," the firm said. Wise also mentioned that the regulator flagged a U.S. consent order from last year concerning compliance violations, adding that it has since strengthened its safety processes.

Wise Pivots to Digital Asset Framework

In response to the denial, Wise announced it will pursue an alternative path. The company plans to submit a new application for a national trust bank charter under the GENIUS Act framework.

This framework specifically pertains to digital assets, including stablecoins. Wise stated that its infrastructure is well-positioned to interoperate with digital assets alongside its existing payment rails, signaling a strategic pivot in its U.S. regulatory approach.