SoFi stock soars after clearing final regulatory hurdle to become a bank

The SoFi Stadium is under construction in Los Angeles.

The shares of SoFi rose as much as 16% in after-hours trading on Tuesday after news that the fintech cleared its final regulatory hurdle in becoming a bank.

The Federal Reserve and the Office of the Comptroller of the Currency approved SoFi to become a bank holding company. The company offers a variety of banking products. It is not a bank. It relies on partnerships with banks to hold customer deposits and issue loans.

In order to become a bank, SoFi plans to acquire Golden Pacific and operate its bank subsidiary as SoFi Bank. The deal is expected to close in February.

It improves the company's economics by bringing on more regulatory oversight. SoFi gets a bigger slice of each transaction by cutting out the middleman. Anthony Noto said a national bank charter will allow lending at more competitive interest rates and give SoFi customers higher-yielding accounts.

Noto said that the step would allow them to be there for their members during the major financial moments in their lives and all of the moments in between.

SoFi has been looking for a bank charter for three years. The application was filed with the Office of the Comptroller of the Currency. In October, the OCC gave preliminary approval.

The company went public last year after merging with a blank check company. The shares have been under pressure this year due to investors rotating away from high-growth tech companies. The shares were down 23% as of Tuesday's close.