Key Takeaways
- Leading crypto firms in the US are seeking bank charters to operate alongside traditional lenders.
- Easing crypto regulations has gained crypto legitimacy within the US banking system.
- Central traditional banks, such as US Bancorp and Bank of America, also expand their crypto operations, signaling mainstream integration.
US President Donald Trump’s support for cryptocurrencies and promise to ease crypto regulations are opening new frontiers. Crypto firms are pursuing pathways to becoming fully fledged financial institutions, even as some banks seek to offer crypto services.
Media reports indicate that a number of crypto companies, led by BitGo and Circle, are now getting close to entering the once-closed doors of the American banking system. This time, someone is listening. Following years of being sidelined by traditional financial systems, they could be coming in through the front door of the US banking system.
Growing Interest in Crypto
According to a report in the Wall Street Journal citing sources familiar with the matter, Circle, and BitGo were on the front lines and ready to submit their applications for bank charters or financial licenses. On the other hand, traditional banks were also reportedly responding to the growing shift, with Bancorp planning to relaunch its crypto custody program via NYDIG. The Bank of America (BofA) has also indicated it intends to create its stablecoin once the legal framework is in place.
On the global scale, a consortium of banks, including Deutsche Bank and Standard Chartered, was reportedly evaluating how to expand crypto operations into the US. Without giving further details, the information highlights the growing interest in crypto, which means that digital assets are no longer just a niche but a competitive frontier. The report states that the firms hope to receive the same level of legitimacy as the established traditional lender and be allowed to hold deposits, issue loans, and launch stablecoins once crypto regulations are in place.
Banks and the Crypto Industry Beginning To Interconnect
Immediately following his inauguration for his second term as President of the United States, Trump set in motion several policy changes and executive orders that have had far-reaching effects on the digital asset sector. A good example would be the dissolution of the National Cryptocurrency Enforcement Team (NCET) within the Department of Justice, and the SEC filed to drop its lawsuit against Coinbase. Moreover, there are bills within the corridors of power on stablecoin and crypto regulation, and the strategic crypto reserve proposal is gaining momentum. It’s no wonder that banks and the digital asset industry are beginning to interconnect.
The developments seem to have emboldened crypto firms previously kept at arm’s length. Anchorage Digital, the only US crypto-native firm with a federal bank charter, says the regulatory lift is massive but worth it. Anchorage CEO Nathan McCauley reportedly stated:
“It hasn’t been easy… the whole gamut of regulatory and compliance obligations that banks have can be intertwined with the crypto industry.”
Conclusion
Anchorage Digital is the only US-based crypto exchange with a banking charter and operates as a traditional bank. It recently became a BlackRock iShares Bitcoin Trust (IBIT) custodian alongside Coinbase. Interesting times lie ahead of us even as the US government burns the midnight oil to ensure crypto regulation is in place.
Frequently Asked Questions
What is the SEC’s approach to crypto regulation?
The newly formed SEC Crypto Task Force seeks to help the Commission provide clarity on the crypto asset market and recommend practical policy measures to foster innovation and protect investors.
What regulatory protection does crypto have?
The regulatory treatment of cryptocurrency varies across jurisdictions, with legal considerations encompassing anti-money laundering compliance, securities laws, taxation, and consumer protection frameworks.
What are the benefits of regulating cryptocurrency?
Regulation would make the crypto market more efficient and help protect investors by providing reliable, public information.
