Figure SPAC plans to merge with bank, implement blockchain – Ledger Insights
Today, Figure Acquisition Corp 1 said it has signed a non-binding letter of intent to merge with a bank holding company that is a mortgage lender and warehouse lender. Figure SPAC (market cap: $412m) is affiliated with Figure Technologies, the blockchain startup, and the merged SPAC intends to roll out blockchain solutions after the merger. The unnamed target bank is privately held, with $3 billion to $5 billion in assets.
To complete the merger, Figure SPAC is requesting a six-month shareholder term extension to August 23, 2023.
“We believe the proposed transaction provides a unique value creation opportunity by combining the bank’s strong balance sheet, nationwide footprint and experienced management team with the team’s deep understanding of and experience in the application of technology to regulated financial services, as well as the necessary capital to grow and execute towards our shared vision of the future of banking, says Michael Cagney, chairman of the company.
Figure has wanted a banking license for years
While the acquirer is Figure SPAC, affiliate Figure Technologies has long sought a banking license, applying for one in 2020 when crypto-friendly Brian Brooks was acting Comptroller of the Currency. However, there was significant pushback from the American Bankers Association, and Brooks left the OCC in early 2021.
Figure Technologies launched the Provenance Blockchain in 2018 as a separate entity that hosts transactions ranging from mortgages to payments, funds and asset-backed securities. It has a native token, Hash.
Last August, Figure merged with Homebridge, a mortgage company that made $25 billion in loans in 2020.
What will the OCC regulator think?
Shortly after, New York Community Bank (NYCB) invested in Figure, and together with the community banking alliance JAM FINTOP, they are co-founders of the USDF consortium. The USDF aims to use blockchain tokens or deposit-linked stablecoins for interbank payments.
However, NYCB’s recent experience with the OCC may be relevant to the Figure SPAC merger as it seeks to obtain OCC approval. NYCB is in the process of merging with Flagstar Bank to become Flagstar Bank NA, and the OCC has filed requirements for the merger. These give the OCC the right to compel NYCB/Flagstar to divest its interest in the USDF Consortium and prevent NYCB/Flagstar from expanding its crypto-related activities.
Here is the claim: “Flagstar NA shall dispose of its holdings in USDF Consortium LLC, and any related holdings of Hash (Provenance blockchain token), within two years from the date of completion of the merger unless the OCC determines in writing that it is permissible for the bank to retain these. investments. In addition, Flagstar NA shall not increase its membership interest in USDF Consortium LLC or its Hash holdings, or holdings of other crypto-related currencies or tokens, unless and until the OCC determines that the membership interest and Hash or other crypto-related holdings are permissible for a national bank.“
The OCC statement also says that the OCC is “currently evaluating the permissibility of this investment [i.e., membership in the USDF Consortium] in an unrelated matter.”
