Crypto Firms Eye Bank Charters as Regulations Ease and White House Support Grows

With backing from the Trump administration and a relaxation of regulations, companies like Circle and BitGo are setting their sights on becoming fully-fledged financial institutions.

A recent surge in interest from crypto companies seeking entry into the American banking system has caught the attention of industry insiders.

Crypto Companies Make a Play for Bank Charters as Wall Street Doors Reopen

After years of being on the sidelines, crypto firms are making a comeback, this time through the front entrance of the US banking sector.

Sources familiar with the matter have revealed that major players such as Circle and BitGo are gearing up to apply for bank charters or financial licenses.

Traditional banks are also adapting to the changing landscape. US Bancorp is relaunching its crypto custody program with NYDIG, and Bank of America has announced plans to introduce its stablecoin once the regulatory framework is in place.

Even global financial giants are taking note. A consortium that includes Deutsche Bank and Standard Chartered is exploring ways to expand their crypto operations in the US.

While specific details are still scarce, the interest from these companies indicates that the crypto sector is no longer a niche market but a competitive arena.

These firms are aiming to operate with the same level of legitimacy and access as traditional financial institutions. This includes holding deposits, issuing loans, and introducing stablecoins under regulatory oversight.

The timing of this move is strategic. A significant shift in federal policy, championed by President Trump’s vision to position the US as a dominant force in the Bitcoin space, has paved the way for regulatory pathways that were once closed off following the FTX collapse.

In tandem with this, Congress is progressing stablecoin legislation that will require issuers to obtain federal or state licenses.

The pursuit of bank status aligns with a broader effort to establish crypto as a legitimate player in the US financial landscape. Earlier this year, regulators rolled back key restrictions, including the SEC’s contentious SAB 121, which had previously prohibited banks from holding crypto assets on behalf of clients.

Federal Reserve Chair Jerome Powell has affirmed that banks can cater to crypto customers as long as appropriate risk management protocols are in place.

In another positive regulatory development, the Office of the Comptroller of the Currency (OCC) has clarified that banks can offer stablecoin and custody services, provided they adhere to established banking regulations.

These regulatory signals have emboldened crypto firms that were once kept at arm’s length. Anchorage Digital, the sole US crypto-native company with a federal bank charter, acknowledges the challenges of navigating regulatory requirements but sees the rewards as substantial.

“It hasn’t been an easy journey… the regulatory and compliance obligations that banks have can be complex when intertwined with the crypto industry,” shared Anchorage CEO Nathan McCauley.

Despite facing compliance costs in the tens of millions, Anchorage has formed partnerships with industry heavyweights such as BlackRock, Cantor Fitzgerald, and Copper for prominent custody and lending initiatives.

BitGo, which is poised to safeguard reserves for the Trump-associated stablecoin USD1, is moving closer to submitting a bank charter application.

Circle, the issuer of USDC, is actively pursuing licenses and navigating competition, much like Tether. This marks a foray of traditional finance (TradFi) into the stablecoin realm.

While Circle recently postponed its IPO citing market volatility and financial uncertainty, insiders emphasize that regulatory clarity remains a top priority for the company.

Other firms like Coinbase and Paxos are exploring similar paths, considering options such as industrial banks or trust charters to expand their financial offerings within the bounds of the law.

On the policy front, venture firm a16z has urged the SEC to modernize crypto custody regulations for investment firms, underscoring the industry’s need for clear guidelines and equal treatment.