Student loan and financial service provider Social Finance Inc. (SoFi) has received conditional approval from the Office of the Comptroller of the Currency (OCC) to create a full service national bank, provided the new entity does “not engage in any crypto-asset activities or services,” the OCC announced on Tuesday.

The approval accounts for SoFi Bank, National Association’s (SoFiBank, N.A.) acquisition of Golden Pacific Bank, National Association, an FDIC-insured national bank. SoFiBank, N.A., which will have its headquarters in Cottonwood Heights, Utah, will also have to meet certain capital contribution requirements and adhere to an operating agreement, the agency said.

“Today’s decision brings SoFi, a large fintech, inside the federal bank regulatory perimeter, where it will be subject to comprehensive supervision and the full panoply of bank regulations, including the Community Reinvestment Act,” OCC Acting Comptroller Michael Hsu said in a statement. “This levels the playing field and will ensure that SoFi’s deposit and lending activities are conducted safely and soundly, including limiting the bank’s ability to engage in crypto-asset activities.”

In October 2020, the OCC gave SoFi preliminary approval for establishing a national bank pending a thorough evaluation of all information available.

SoFi has a digital asset trading subsidiary and went public last year through a merger with a special purpose acquisition company (SPAC) at an $8.6 billion valuation. SoFi finished Tuesday trading at just over $12 per share, down more than 8%.

In a note following the OCC announcement, Mizuho Securities USA analyst Dan Dolev maintained his buy rating on SoFi. “While handling crypto as a bank holding company will likely require some disclosure changes, we believe these issues are fully solvable and should not adversely impact SoFi’s future product capabilities.” Dolev added: “Crypto transactions by bank holding companies are permitted. And we estimate that SoFi may have up to 5 years (including extensions) to become compliant.”

SoFi Bank, N.A. will hold $5.3 billion in total assets and $718 million in capital and provide local commercial-focused loans and deposit products that Golden Pacific offers.

UPDATE (Jan. 18, 2022, 1:07 UTC): Adds stock price and comment from Mizuho Securities.


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