Block Seeks National Trust Bank Charter to Bolster Bitcoin Operations

Block, the company behind Square payment terminals and Cash App, has submitted paperwork to establish an uninsured national trust bank called Builders Bank & Trust. This move is aimed at improving Block's under-the-hood operations, particularly with regards to its Bitcoin business.

The proposed bank will offer custody and related fiduciary services for Bitcoin and stablecoins, although it didn't name any specific stablecoins. As a national trust bank, Builders Bank won't hold client deposits or provide loans, but instead act as a fiduciary in managing assets. This setup reduces the need to pay custody fees for managed assets.

Block has been bullish on Bitcoin since embracing it years ago, using it as a source of revenue and a foundational digital currency for its treasury. The company's Cash App users have shown interest in buying and selling Bitcoin, with Bitcoin-derived revenue reaching almost $1.9 billion in the most recently reported quarter, accounting for nearly 29% of total net revenue.

While operating a national trust bank will save Block time, effort, and capital in pursuing its crypto ambitions, investors may want to see clearer plans on how to boost profitability in this area, as current margins are low at under 4%.