(Reuters) - A group of U.S. state banking regulators dropped its lawsuit seeking to block the federal government from granting bank charters to fintech companies on Thursday, after the company that was first in line modified its business plan. The Conference of State Bank Supervisors (CSBS) sued the U.S. Comptroller of the Currency (OCC) in 2020, arguing that giving national bank status to fintechs would flout states" authority to oversee non-bank lenders. The lawsuit filed in Washington, D.C., sought to block approval of a charter application by Figure Technologies Inc, saying the OCC lacked authority to classify companies that do not receive deposits as banks. Figure updated its application in December, saying it plans to offer federally insured deposit accounts. The CSBS lawsuit was part of a years-long fight between state and federal regulators over who should regulate app-based financial services and online lenders. Acting Comptroller of the Currency Michael Hsu said in a speech in November that his office is deepening its relationships with state regulators, and that fintechs should be held to banking standards. The case is Conference of State Bank Supervisors v. Office of the Comptroller of the Currency et al., U.S. District Court, District Of Columbia, No. 20-cv-03797. For CSBS: Jennifer Ancona Semko and Graham Cronogue of Baker Mckenzie For the OCC: Marsha Stelson Edney and Benjamin McDonough Read More: 2nd Circuit reverses win for NY in fintech regulatory dispute