Authors:Gina Heeb & Vicky Ge Huang
Translated by: TechFlow
After the collapse of FTX and the failure of two crypto-supporting banks, regulators have cracked down on cryptocurrency, prompting some traditional financial institutions to part ways with the industry. However, Trump's promise to make the United States a "Bitcoin superpower" has paved the way for further integration of cryptocurrency and the banking system.
According to informed sources, a group of cryptocurrency companies, including Circle and BitGo, plan to apply for bank charters or licenses. Other sources say that cryptocurrency exchange Coinbase Global and stablecoin company Paxos are also considering similar moves.
Meanwhile, the Trump administration is pushing to incorporate cryptocurrency into the mainstream financial system, and Congress is advancing two bills that will establish a regulatory framework for stablecoins, which allow people to easily move in and out of more volatile cryptocurrencies. The legislation will require stablecoin issuers to obtain charters or licenses from regulators.
Some cryptocurrency companies are interested in national trust or industrial bank charters, which would allow them to operate more like traditional lending institutions, such as accepting deposits and issuing loans. Other companies are pursuing relatively narrow licenses to allow them to issue stablecoins.
The Trump family's cryptocurrency project "World Liberty Financial" announced plans last month to launch a stablecoin called USD1. According to informed sources, the stablecoin's reserves will be guaranteed by crypto custody company BitGo, which is close to submitting a bank charter application.
Any cryptocurrency company that obtains a bank charter will be subject to stricter regulatory oversight.
So far, Anchorage Digital is the only cryptocurrency company in the United States with a federal bank charter, and the company says it has spent tens of millions of dollars to comply with regulations.
In 2022, a banking regulator issued a consent order to Anchorage, pointing out deficiencies in its anti-money laundering efforts.
"It's not easy," said Anchorage CEO Nathan McCauley, who obtained the charter in 2021. But he said, "All banking regulatory and compliance obligations can be combined with the crypto industry."
BitGo is one of the crypto companies planning to apply for a bank license
The San Francisco-based company became one of the custodians of BlackRock's iShares Bitcoin Trust this year, collaborating with Coinbase. Anchorage has also worked with Cantor Fitzgerald and crypto custody company Copper to service the company's $2 billion Bitcoin-backed loan program. Tether is a major client of Cantor, which was previously led by Commerce Secretary Howard Lutnick.
Stablecoins are pegged to the US dollar or other government-issued currencies and hold reserves in cash or cash-like assets similar to Treasury bonds to maintain a one-to-one value ratio. Tether is the largest stablecoin by market value, at $145 billion, while Circle's USD Coin is the second-largest, with about $61 billion in circulating tokens.
Just a few years ago, after the FTX collapse, regulators cracked down on the industry, and major banks cut ties with cryptocurrency companies. After the collapse of Silvergate Capital and Signature Bank, many industry founders found it difficult to find new banks willing to accept their deposits or lend to them.
After Trump's return to the White House, regulators have canceled regulations requiring banks to obtain approval to engage in crypto activities. According to informed sources, further guidance on how banks can participate in cryptocurrency is expected to be released later this year.
Meanwhile, some banks are working to catch up and establish connections with the industry.
In February, Bank of America CEO Brian Moynihan said the bank would issue its own stablecoin if a legal framework is established. United Bank this month said it would restart its crypto custody services through a partnership with Bitcoin trading and banking company NYDIG.
According to informed sources, a banking consortium including Deutsche Bank and Standard Chartered has begun exploring how to expand crypto business in the United States. A Deutsche Bank spokesperson declined to comment. Standard Chartered did not respond to a request for comment.
Some banks remain cautious. KeyCorp CEO Chris Gorman said cryptocurrency might increasingly become a competitor to the industry, and his bank sees potential opportunities in the field but wants to observe its development first.
He pointed out the challenges of cryptocurrency in regulatory areas such as anti-money laundering. He said banks can observe its direction, "but beyond that, it's hard to track."
