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Photo Illustration: Sarah Grillo/Axios. Photo: Burhaan Kinu/Hindustan Times via Getty Images

Jack Dorsey's Square, the upstart payment processor for smaller merchants, got the OK to open a bank, after nearly three years of trying.

Why it matters: Square applied to set up an industrial loan company — a "lite" bank that isn't subject to Federal Reserve supervision — which hasn't been approved in more than a decade. It may open the floodgates for companies that want all the perks of being a bank without the same amount of oversight.

Driving the news: Square Financial Services, as the fintech's bank is to be called, will be based in Utah, and — when it opens in 2021 — will collect deposits and lend money to merchants that use Square devices.

  • The approval comes at a crucial time for Square, as many of its customers are the kind of small businesses that have been forced to shutter because of the coronavirus.

The conditions placed on Square — by the FDIC and the Utah Department of Financial Institutions — are way tougher than those of typical banks. But they are still answering to fewer regulators.

  • Its initial capital level will be $56 million, "significantly higher" levels of capital than other banks, per the FDIC.
  • The FDIC will also have the right to examine Square Financial Services' parent company.

Of note: The FDIC signed off on educational company Nelnet's request to launch a bank.

What they're saying: "Nonbanks have always wanted deposit insurance," Thomas Vartanian, a longtime banking lawyer who heads a financial regulatory institute at George Mason University’s Antonin Scalia Law School, tells Axios.

  • "If you can take deposits at a very low cost, that's an enormously cheap way to fund yourself," he says, as opposed to regular companies that go into the markets and borrow money at more expensive rates.

The bottom line: Applications like Square's caused an uproar in the banking industry more than a decade ago. Remember when Walmart tried to be a bank? Traditional banking institutions howled about the potential consolidation of power in a single company.

  • But Square's approval marks the beginning of a friendlier approach, reopening the doors for other tech companies to open their own banks.

Go deeper

N.Y. Times faces culture clashes as business booms

Illustration: Sarah Grillo/Axios

New York Times columnist David Brooks' resignation from a paid gig at a think tank on Saturday is the latest in a flurry of scandals that America's biggest and most successful newspaper company has endured in the past year.

Driving the news: Brooks resigned from the Aspen Institute following a BuzzFeed News investigation that uncovered conflicts of interest between his reporting and money he accepted from corporate donors for a project called "Weave" that he worked on at the nonprofit.

America rebalances its post-Trump news diet

Illustration: Annelise Capossela/Axios

Nearly halfway through President Biden's first 100 days, data shows that Americans are learning to wean themselves off of news — and especially politics.

Why it matters: The departure of former President Trump's once-ubiquitous presence in the news cycle has reoriented the country's attention.

2021 sees a record number of bills targeting trans youth

Illustration: Annelise Capossela/Axios

Republicans in at least 25 states have introduced over 60 bills targeting transgender children — a legislative boom since January that has beaten 2020's total number of anti-trans bills.

Why it matters: LGBTQ advocates say the unprecedented push was catalyzed by backlash to Biden's election and the Supreme Court ruling that workers cannot be fired for being gay or transgender.