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Illustration: Annelise Capossela/Axios

Varo Money, one of many upstart challenger banks, received its bank charter effective Aug. 1.

Why it matters: The benefits for Varo Bank (as it can now officially be called) are obvious. Varo now controls its own deposits, and can use them to fund loans; it also has a lot more freedom to innovate, now that it doesn't need to work within a partner bank's APIs.

  • Because Varo has a national bank charter (unlike Square, which is chartered in the state of Utah), it no longer has to worry about being in compliance with 50 different state financial regulators. One federal charter is all it needs.

The benefits for the rest of us are that a large and fast-growing financial player (CEO Colin Walsh tells Axios that Varo's deposits have trebled over the course of the pandemic) is now subject to full regulatory scrutiny.

What they're saying: "Innovation is happening outside the bank charter today," says Brian Brooks, acting comptroller of the currency and Varo's new regulator. "That creates some amount of risk to the financial system. As incentives have grown for people to operate financial services companies in a specialty way, it has become harder for bank supervision to monitor risks."

What's next: Now that the dam has broken, expect more national charters in relatively short order — within the next year or so. SoFi could be next.

  • While it took more than three years for Varo to get its charter, SoFi's is likely to come more quickly. "The early pioneers had to take covered wagons over the Rockies," Brooks tells Axios. "Now we take a plane flight."

Go deeper

What banks' booming profits say about the economy

Illustration: Sarah Grillo/Axios

Some of America's biggest banks are making more money now than they were before the pandemic hit.

Why it matters: Quarterly earnings out this week hint that the worst economic scenarios haven't yet come to pass. Still, executives are warning there could be a rocky road ahead for the economy.

Scoop: Trump-backed Perdue says he wouldn’t have certified Georgia 2020 results

Perdue at a December 2020 campaign event in Columbus, Ga. Photo: Elijah Nouvelage/Getty Images

Georgia gubernatorial candidate David Perdue wouldn’t have signed the certification of the state’s 2020 election results if he had been governor at the time, the former Senate Republican told Axios.

  • “Not with the information that was available at the time and not with the information that has come out now. They had plenty of time to investigate this. And I wouldn’t have signed it until those things had been investigated and that’s all we were asking for," he said.

Why it matters: There has been no evidence widespread fraud took place in Georgia's elections last year and the November results were counted three times, once by hand.

Beijing Olympics: These countries have announced diplomatic boycotts

Photo: Zhang Qiang/VCG via Getty Images

Several countries, including Canada and Australia, have announced they will join the U.S. in a diplomatic boycott of the 2022 Beijing Winter Olympics to protest human rights abuses committed by China's government.

Driving the news: Leaders have faced pressure from human rights groups and others to boycott the Games, pointing to the ongoing genocide of Uyghurs and other Muslim minorities in China's Xinjiang region and other abuses.