Block Wants Two Banks

You've probably noticed that Block already owns a bank. Square Financial Services has been an FDIC-insured, deposit-taking institution since March 2021. Why is Block filing for a second one?

The quick answer is crypto. Block wants to custody Bitcoin and stablecoins in its own federally supervised institution. But a company that spent four years getting one charter doesn't volunteer for a second regulator and a second examination cycle just to expand a product line.

Block filed for a second charter to house digital assets in a separate institution from insured deposits. The two banks would share a parent company and nothing else.

The bank Block already has

Square Financial Services is one of about two dozen industrial loan companies chartered across six states. Block applied in 2017, received conditional FDIC approval in March 2020, and opened a year later.

As of mid-2026, SFS holds over $2 billion in assets, more than $500 million in FDIC-insured deposits, and about $1.4 billion in outstanding loans. It originates small business loans through Square Capital and consumer loans through Cash App Borrow, which the FDIC approved SFS to handle directly in March 2025 after years of routing through a partner bank.

The ILC charter gives Block direct access to the deposit base and the lending license, without the Federal Reserve consolidated supervision that a traditional bank holding company faces. Block's parent is exempt from the Bank Holding Company Act because ILC parents are carved out.

But the charter doesn't extend to holding Bitcoin and stablecoins as a primary custody business.

What Builders Bank would do

On September 8, 2026, Block filed with the OCC to establish Builders Bank & Trust, N.A., a national trust bank headquartered in Sioux Falls, South Dakota. It would custody Bitcoin and stablecoins under federal supervision without taking deposits, making loans, or carrying FDIC insurance.

National trust banks skip deposit insurance premiums and Community Reinvestment Act obligations. In exchange, they can only offer custody and fiduciary services.

The federal charter would also replace Block's current regulatory patchwork. Block operates crypto services under 50-plus state money transmitter licenses today, each with its own examination schedule and compliance requirements. A single OCC charter preempts those state-by-state relationships.

Block named Lee Woolley as proposed CEO. Woolley, currently Block's digital asset strategy lead, held senior roles at Northern Trust and BNY Mellon.

Builders Bank would be the latest in a wave. The OCC has approved 21 trust bank charters in the current term, 13 for crypto-related companies including Circle, Ripple, BitGo, Paxos, and Fidelity Digital Assets.

Why two charters

Block could add crypto custody to Square Financial Services. The OCC confirmed in 2020 that banks may custody cryptocurrency, and a 2025 interpretive letter rescinded the requirement for prior supervisory approval.

But SFS holds hundreds of millions in FDIC-insured deposits. Everything inside that institution falls under the FDIC's examination scope. Adding Bitcoin custody means every examiner cycle now includes digital asset risk alongside the deposit and lending portfolio, and if the crypto side triggers concern, the deposit franchise absorbs the scrutiny.

A separate trust bank isolates the digital assets in an institution with its own capital rules and examination cycle. SFS answers to the FDIC and Utah's Department of Financial Institutions, while Builders Bank would answer to the OCC. When a crypto-specific regulation changes, only one entity adapts.

The crypto position

Block's digital asset business is large enough to justify its own institutional plumbing. Cash App has roughly 57 million monthly transacting actives. In Q2 2026, Bitcoin ecosystem revenue hit $1.89 billion, about 30% of Block's total revenue, though the margin is thin because Block passes Bitcoin through at near cost.

The company holds about 9,000 BTC on its corporate balance sheet and custodies another 19,357 BTC for customers, totaling roughly $2.2 billion at the time of its Q1 2026 proof-of-reserves report.

In May 2026, Cash App launched fee-free USDC support across Solana, Ethereum, Polygon, and Arbitrum. Its Proto subsidiary builds 3nm Bitcoin mining ASICs and has a deal with Core Scientific for about 15 exahashes per second of capacity. Bitkey, the self-custody hardware wallet, ships to over 95 countries.

A company operating a stablecoin payment product, a mining hardware business, a self-custody wallet, and billions in customer Bitcoin needs a regulated custody entity purpose-built for digital assets.

The risk

The ICBA filed a formal objection in October and is suing to challenge the OCC rule that expanded trust bank eligibility. If a court narrows what national trust banks can do, Builders Bank and over a dozen other recently approved crypto charters face uncertainty.

But the two-charter logic doesn't depend on the specific vehicle. Insured deposits and uninsured digital assets fail in different ways and need different supervisory regimes. Whether the second entity is an OCC trust bank or something else, Block needs two containers because it holds two fundamentally different kinds of value.