Crypto Firms Circle And BitGo Set To Pursue US Bank Licenses, WSJ

Crypto is reportedly becoming more integrated into the conventional banking system, according to the Wall Street Journal. This shift occurs after the regulatory crackdown that followed the failure of crypto exchange FTX and its aftermath for many crypto-friendly institutions caused many in the conventional financial sector to withdraw their support from the digital asset market. 

But now, with Trump’s recent vow to make America a “Bitcoin superpower,” things might be starting to change, the report alleges, and more integration between crypto and conventional banking could be on the horizon.

Push For Mainstream Crypto Finance

Several crypto firms, including Circle and BitGo, are reportedly planning to apply for banking charters or licenses. Notably, Coinbase Global and the stablecoin company Paxos are also considering similar steps. 

As reported by Bitcoinist, the Trump administration aims to mainstream crypto finances, as such, Congress is advancing legislation that would create a regulatory framework for stablecoins.

These proposed regulations would require stablecoin issuers to obtain charters or licenses from regulators, a move that could fundamentally change the operational dynamics of the digital asset market. 

Many firms are exploring options for national trust or industrial bank charters, which would allow them to function similarly to conventional banks by accepting deposits and making loans. Others are reportedly pursuing more specialized licenses that would enable them to issue stablecoins.

Shifting Political Climate

Any firm that secures a banking charter will face stricter oversight, a reality that has been vividly illustrated by Anchorage Digital, the only digital asset firm in the US to hold a federal bank charter. 

CEO Nathan McCauley told the Wall Street Journal that the company has invested tens of millions of dollars to meet regulatory obligations, which include stringent anti-money-laundering measures.

Anchorage’s recent partnership with major financial players, including BlackRock and Cantor Fitzgerald, underscores the growing acceptance of digital assets within mainstream finance. 

Just a few years ago, major banks severed ties with crypto firms amid a wave of regulatory scrutiny following the FTX incident. The fallout from the collapse of Silvergate Capital and Signature Bank left many crypto entrepreneurs struggling to find banking partners willing to accept their deposits or provide loans. 

However, the political climate is shifting, and under Trump’s administration, regulators have begun to relax restrictions that previously required banks to obtain approval for crypto-related activities. New guidance on how banks can engage with crypto is anticipated later this year.

Some banks are eager to catch up and establish partnerships within the crypto space. For instance, Bank of America’s CEO Brian Moynihan expressed interest in issuing a stablecoin, contingent upon a solid legal framework. 

Similarly, US Bancorp recently announced plans to relaunch its digital asset custody service in collaboration with NYDIG, a Bitcoin trading and banking firm.

Conversely, some banks remain cautious. KeyCorp’s CEO Chris Gorman acknowledged the potential risks posed by digital assets, viewing them as both an opportunity and a competitive threat. 

Gorman emphasized the importance of understanding the evolving regulatory landscape, particularly concerning anti-money-laundering safeguards.

Featured image from DALL-E, chart from TradingView.com