Revolut's US Banking Bid Exposes UK's Regulatory Paralysis

The £75bn London-born fintech has just told you everything you need to know about the state of Britain's regulatory environment. Revolut announced on Thursday it's filing for a US banking licence for the second time—despite its first American attempt collapsing in spectacular fashion with a $20m loss from a payment system flaw. Meanwhile, back in Britain, the firm remains stuck in a regulatory purgatory that has now stretched beyond a year.

That reversal tells a story far bigger than one company's licensing woes. Under President Trump's deregulation agenda, America has become the easier place for a British fintech giant to secure full banking status than its home market—a reality that should trouble anyone concerned about London's competitiveness as a financial centre.

Revolut founder and chief executive Nik Storonsky framed Thursday's announcement as a "major milestone" towards building what he called the "first truly global banking platform." The licence, he said, would enable the firm to move toward its goal of 100 million customers—an ambitious target given Revolut currently serves just 1.2 million Americans. The company also named former Visa executive Cetin Duransoy as its new US chief, replacing Sid Jajodia, who moves to the role of global chief banking officer.

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The California dream that became a regulatory nightmare

Revolut's optimism about its second American swing requires context. The firm first applied for a US banking licence through California regulators in March 2021, but that effort stalled amid regulatory friction and was withdrawn by late 2023. The problems weren't minor: a $20m loss from a payment system flaw and concerns over internal financial controls don't exactly inspire confidence in a firm seeking to hold customer deposits.

Those issues haven't magically disappeared. Revolut has been in a "mobilisation period" for its UK banking licence since 2024, following a three-year wait for initial approval. This period is designed to be temporary—a chance for newly licensed banks to prove they can handle the responsibilities before receiving full authorisation.

That Revolut remains stuck there suggests either extreme regulatory caution or unresolved concerns about the firm's operational readiness.

The company itself has said its scale and complexity—making it the largest firm to move through UK mobilisation—means "getting this right is more important than rushing to meet a specific date." Perhaps. But when getting it right in Britain takes longer than securing approval in a market where you've already demonstrated control failures, something has shifted in the regulatory calculus.

Trump's deregulation creates a fintech gold rush

Revolut isn't alone in spotting an opening. A cohort of major fintech players has rushed towards US banking licences since Trump's administration began dismantling post-financial crisis protections.

Dutch challenger Bunq—Europe's second-largest digital bank with 20 million users—has applied for a US national charter through the Treasury Bureau. Payments giant PayPal filed for a US licence in December to bolster its small business lending capacity, having already provided over $30bn in loans and working capital since 2013. Brazilian fintech Nubank and crypto giant Coinbase have both lodged applications in 2025.

The catalyst? Trump's sweeping reforms to the Dodd-Frank Act and Consumer Protection Act of 2010, both enacted after the financial crisis to improve stability and accountability. The changes hiked the asset threshold for tough prudential standards from $50bn to $250bn, meaning far fewer firms face stringent oversight. The infamous Volcker Rules were also eased for lenders with assets below $10bn, relaxing restrictions on certain speculative investments.

These firms aren't simply exploring options or conducting feasibility studies—they're actively filing applications whilst the regulatory window remains open.

That suggests a genuine arbitrage opportunity, not merely Revolut-specific factors or coincidental timing.

The competitiveness question Britain can't ignore

The UK's Financial Conduct Authority and Prudential Regulation Authority face a genuine dilemma. These regulators exist to protect consumers and ensure financial stability—roles that became brutally important after 2008. Rushing to approve a banking licence for a firm with documented control issues and a history of regulatory friction would be irresponsible.

Yet the glacial pace creates its own risks. If Britain's regulatory environment becomes so cautious that homegrown success stories find it easier to operate under federal US oversight—even after failing there once—then something has gone wrong with proportionality. The UK's advantage as a fintech hub has long rested on being nimbler and more innovation-friendly than European peers whilst maintaining credible standards. That balance appears increasingly precarious.

Revolut's US licence application will allow it to operate across all 50 states under federal regulatory oversight—a simpler proposition than navigating individual state requirements. Whether American regulators prove more accommodating than their British counterparts remains unclear, particularly given the firm's troubled history there.

For UK policymakers, the question isn't whether Revolut deserves faster approval—that depends on whether the firm has genuinely addressed regulators' concerns. The question is whether Britain's system has become so risk-averse that it's creating a competitive disadvantage even against a deliberately deregulated American alternative. The fintech gold rush heading west suggests the answer may be uncomfortable.

More articles by Ross Williams