Crypto Firms Eye Banking Licenses to Restore Ties with U.S. Financial System

Cryptocurrency firms are increasingly pursuing banking licenses in the United States to reestablish and strengthen their ties with the traditional financial system. A more favourable regulatory environment influences this strategic shift in the country under the Donald Trump administration.

The crypto industry has been disconnected from traditional finance since 2022 due to regulatory pressure. This occurred following the collapse of FTX, led by Sam Bankman-Fried. The closure of two crypto-friendly banks, Silvergate Capital and Signature Bank, also played a notable role.

This, however, changed after Trump returned to the White House. Regulators rolled back rules requiring banks to get approval to engage in crypto activities.

Journey Back to the Banking Sector

Per a report, firms such as Circle and BitGo are set to apply for bank charters or licenses. This would enable them to offer a broader range of financial services, including lending, custody, and payment solutions, void of third-party involvement. This license, if approved, would also boost their credibility with institutional investors and retail customers.

The move by these firms also stems from the desire to offer a broader range of financial services. Notably, any crypto company that obtains a bank charter would become subject to even stricter regulatory oversight.

Anchorage Digital, the only crypto firm in the country with a federal bank charter, disclosed that it spent tens of millions of dollars to comply with regulations. However, navigating the regulatory and compliance obligations that banks face can be challenging for the crypto industry.

Meanwhile, crypto firms hope that further guidance on how banks can interact with the industry will be communicated later this year.

Friendly Regulatory Environment

Since resuming office, President Trump has made notable moves to fulfill his pledge of making America the world’s cryptocurrency capital. One of them is the STABLE Act, which aims to strengthen transparency and accountability in stablecoin operations. It also allows people to trade in and out of more volatile cryptocurrencies easily.

It is worth mentioning that World Liberty Financial, the Trump family’s crypto project, proposed a test airdrop of its USD1 stablecoin. According to the Project, the stablecoin’s reserves would be safeguarded by crypto custodian BitGo, which is nearing the submission of its bank charter application.